@SVUSD1 @svhsdragons 2015-16 Budget "Best 3 Year Projection in Years."

The Sonoma Valley Unified School District had the first read of its 2015-16 budget on Tuesday night, presented by John Bartolome, the District's Chief Business Official.  John, for those of you who don't know him, is a graduate of Purdue University, helps out faithfully with the Sonoma Valley High School Wrestling Team, and apparently is one hell of a golfer.  He also had the chance, with this budget, to give Sonoma Valley Unified some of the best budget news it has ever had. I got the video courtesy of SVTV, which is very much appreciated. The video runs about 20 minutes, but I recommend it to anyone interested in a succinct picture of how things now look after the past half-decade of cuts.

John does a very nice job of explaining what's taking place; there's some terminology that can be confusing. To make sure nobody gets lost, LCFF stands for "Local Control Funding Formula," which is the new (reformed) method of financing public schools in California.  It was supposed to be phased in to its planned level through 2021–that is, schools weren't planned to be fully funded in California for another half a decade.  But, given the improvement in California's budget, school funding under LCFF has reached 70% of the 2021 figure. 

There's some discussion of deficit spending.  The district "planned" to run a deficit in the last year, and has done so for several years; that was due probably to the conservative projections made on funding.  When the local economy takes it in the teeth, that's what reserves are, of course, for, and the level of State funding has gotten to the point where the budget is essentially balanced as of 2017-18, which is a very significant change from years past.

There's also some discussion in the presentation of the concept of "Basic Aid," which is a special system under the line of legislative responses to Serrano v. Priest that allows some Districts to receive more funding than others due to their very high levels of property tax received.  During the most recent economic mess, State funding fell so low that Sonoma Valley actually became a Basic Aid district–which is expected to end in the next year.  Not a bad thing, as John points out, but instead more of a sign of the consequences of an economic recovery (... or of another speculative bubble). 

The Fall of Measure A, and Roadway Congestion Pricing.

In the wake of the defeat of Sonoma County's Measure A yesterday, I started thinking about what other alternatives are available to mitigate Sonoma County's roadway issues.  As many of the readers of this blog are aware, Measure A was a quarter-cent sales tax in Sonoma County intended to fund pavement improvements.  The stories in the press before the election focused on the low quality of Sonoma County's roads, and indeed there's ample evidence of the problem. Sonoma County is generally considered to have the worst Pavement Condition Index of any county in the San Francisco Bay Area. That's saying something, as the region isn't known for the quality of its roadways.

However, the Sonoma County Board of Supervisors' proposed solution, a sales tax, always seemed strange to me from a policy standpoint. Sales taxes are regressive, and aren't closely tied to the use of the roadways. Gas taxes have historically been used to fund maintenance (let alone improvement) because the use of the roads was (loosely) tied to the amount of tax paid. Of course, that system in the United States has been failing for decades. Improved fuel economy has delinked miles travelled from the amount of tax paid. But there's also another problem with fuel taxes. 

That problem turns on the primary complaint of voters when it comes to matters such as these.  It isn't actually the quality of the roadways. Instead, it's typically roadway congestion. For, as no less an authority than Harvard psychology professor Daniel Gilbert has noted, "[d]riving in traffic is a different kind of hell every day."  So, while charging users for miles driven isn't a bad solution, charging them for driving those miles at the most congested times in the highest traffic areas is generally best. It provides revenue to improve the roads not based on the damage done to the road, but instead on the inconvenience imposed on all the other voters for inefficient timing of one's travel of the right-of-way. 

I concede, without argument, that, for the moment, for Sonoma County, trying to introduce a comprehensive system of congestion charges is asking too much. While Sonoma Valley's per-square-foot real estate prices may be approaching those of London or Singapore, that doesn't means the voters are yet ready for Zurich or Stockholm style road pricing. But there is lower hanging fruit whose benefits could be substantial.

 Highway 37/121 Juncture

Heavy Traffic in dark black

available at http://quickmap.dot.ca.gov

Take, for instance, the junction of Highways 37 and 121 in the southeastern corner of Sonoma County. As many are aware, the traffic in the afternoon heading from Sonoma County into Solano County, where 37 shrinks from two lanes to one, produces epic traffic jams. The problem isn't inter-Sonoma County traffic– instead it's the commuters trying to reach Solano County. For residents of Sonoma Valley returning home from San Francisco, it's a regular annoyance. For a tourist destination like the City of Sonoma, it's a foot on their economic windpipe. The Press Democrat has reported on the problem before, and motorists have even started petitions asking for help with the situation.

The nasty congestion at 37 is a classic example of the overuse of a public good (a free highway). Since each driver need not pay any fee to use the roadway, commuters over-exploit Highway 37. Each motorist gets a small benefit from traveling the road, and many are motivated to maximize their use by traveling it every workday, becoming reliant on it. Yet the costs of their use are imposed on the residents of Sonoma County, whose use (and the use of their tourists) is less (often, much less) intense.  Pretty frequently, the problem snowballs around 3 PM, until the resource collapses, in the form of a traffic nightmare. 

The irony of all this is that the builders of the roadway were well aware of these kinds of problems.  Indeed, Highway 37 was originally built as the "Sears Point Toll Road," managed by the Golden Gate Ferry. The imposition of tolls is an obvious solution to the tragedy of the commons–frequent users pay a higher price.  But when the State of California purchased the roadway in 1938, the tolls were eliminated. 

Now, that was probably a decent idea during the Great Depression. Collecting tolls in that era was much more disruptive than billing the FasTrak equipped cars of today, and spending on roads to improve the general welfare was politically uncontroversial. But the technical problems of toll billing have long been resolved, as the improvement in traffic on the Golden Gate Bridge heading into San Francisco since mandatory electronic toll collection began in March of 2013 illustrates. And the overall impact of congestion charges worldwide has been positive, from London to Singapore.

Toll Monitoring Station, Singapore. 

Photo Courtesy Michele Simoni

available at http://www.ivt.ethz.ch/docs/students/sa389.pdf

User fees imposed on Highway 37 from Sonoma to Vallejo (a step toll is preferred) would improve the ability of tourists to reach upvalley destinations in a timely fashion. Such a solution is consistent with the history of the roadway. It helps resolve the primary concern of the voters, congestion, while avoiding politically impractical roadway expansion.  It provides revenue to resolve the pressing policy problem, roadway maintenance. And it promotes efficient use of a public good. At a stroke, it uses technology to help resolve a series of different thorny problems. 

This kind of a solution isn't limited to the junction of 37 and 121. The politics of such a solution at  San Antonio Creek are somewhat different (the commuters causing congestion there are residents of the County, those at 37/121 generally are not).  But if the remedy proves practical at Sears Point, there are other locations where such congestion pricing would make a great deal of sense (for instance, upon entering Sonoma Valley ...).  

Before yesterday's vote, congestion pricing in Sonoma County was largely a mere gedankenexperiment.   But after the failure of Measure A, it's another matter entirely.  As Ernest Rutherford was fond of saying, "[w]e've got no money, so we've got to think." In that vein, I suggest it is going to have to be creativity, then, rather than higher taxes, that Sonoma County will have to rely upon to resolve its long term traffic problems.

@svhsdragons @svusd1 47.7% of Seniors on Path to Complete UC/CSU A-G, well done.

Data courtesy Sonoma Valley Unified School District &
California Department of Education
available online at http://data1.cde.ca.gov/dataquest/

The Freshman Teams data discussed here before, and some newer data on Sonoma Valley High's A-G Completion Rate, were both on the Sonoma Valley Unified Board of Trustees agenda on May 12. The Freshman Teams handout that was discussed is here; there was an additional handout regarding the A-G completion rate, which is here. The main table from the second handout is on the right, and the video of the presentation (~29 minutes) is below.

The findings discussed were relatively straightforward. As of the end of the 1st Semester of 2014-15, 136 Sonoma Valley High School seniors are on track to complete the A-G requirements, with a C- or better. With the 
exception of St. Helena,
 whose per-pupil 
expenditures are
 approximately $17,590 
per students versus the
~$9,389 spent in Sonoma
 Valley, SVUSD 
consistently rates as the
 highest performing
 District in the area amongst those with 100 graduates per year or more.

Further, since creating Freshman Teams, Sonoma Valley Unified has moved the majority of its students into the college-potential category as of the end of freshman year, nearly doubling the number in the top tier.  The change in performance is not attributable to either grade inflation or weighting, although there has been a recent substantial increase in students taking advanced coursework.  Should the general performance of the 2010-2011 freshmen (~90% of 3.5 A-G complete three years later, ~50% of 3.0+ A-G complete three years later) be replicated amongst the 2013-14 freshmen when they are seniors, SVUSD’s A-G rate in 2016-2017 would be expected to demonstrate further growth to the neighborhood of 51.9%.

It's kind of dry to read on a page. Seeing it discussed amongst the Trustees, the Superintendent, Sonoma Valley High's Principal, the Student Trustee, and our County Office of Education Representative is another matter entirely.  The video is about 29 minutes long, but if you're interested in education in general, I recommend it to you. And yes, that's me you see speaking from the podium.

Freshman Teams, Student Performance, and the Case For SVUSD's Master Plan.

So, it's my birthday today, and those of you that know me will be unsurprised that my gift to myself was speaking at "Career Day" at Adele Harrison Middle School in Sonoma. I always find it rewarding to talk with students about their plans for the future. But this year, and in this instance, I had just that little extra bit of a reason to be positive. Because I've been spending some time reviewing the consistently increasing performances delivered by students just like those I spoke to today when they reach Sonoma Valley High.

---

Data courtesy Sonoma Valley Unified School District.
Framework from Elaine M. Allensworth,
Julia A. Gwynne, Paul Moore, and
Marisa de la Torre, "Middle Grade Indicators of
Readiness in Chicago Public Schools.”
available online at http://tinyurl.com/myq87ag

On the right is a graph tabulated from freshman grade information at Sonoma Valley High since 2006. But first, a bit of background.

Recent research shows that middle school attendance and GPA, when combined, are the single best predictor of high school GPA. Qualitatively, most (public) high schools grade students similarly; however, similar students perform differently depending on school, with some schools improving performance up to .5 of a grade point – and with most of those benefits received by the students between a 1.0 and a 3.0. Those student who manage to reach or exceed a 3.0 in high school increase both their chances of attending college, and graduating from college, the higher their GPA moves.

The study really caught my eye because, beginning in 2011, Sonoma Valley High School created their Freshman Teams, small communities of incoming students with shared schedules. To the extent that the context students enter high school can affect performance, should the Freshman Teams have been functioning positively, an improvement of approximately .5 of a GPA would be expected, with the primary benefits impacting students who would have earned between a 1.0 and a 3.0.

And lo and behold the graph shows exactly what I'd hoped when I started looking at this data. Since the program was instituted in the 2011-2012 school year, Sonoma Valley Unified has moved the majority of its students into the college-potential category as of the end of freshman year, nearly doubling the number in the top tier. Attendance improvements were positively correlated with GPA improvements. Further, as would be expected, the biggest GPA change impacted students between a 1.0 and a 3.0, with essentially a third of the students expected to fall into the range moving into the college potential or college probable tiers.

That wasn't all -- at the same time this was going on, the number of students taking accelerated coursework (math & language) nearly doubled.  Sonoma Valley High gives the students no break on grading for their initiative in choosing a harder schedule – there is no bonus weight assigned to their GPAs for this effort.  So not only are the students earning better grades, but they've been doing it taking harder classes at the same time.  

The students I saw at Adele will now more likely than not be in a position to pursue college when they attend Sonoma Valley High in the years to come. The full handout (with the citations and backup) is here.  And the question this data makes me ask myself is: will we give these students the schools and the facilities that their performance deserves?

Can we execute on our school district's Master Plan?

---

Poll, Sonoma Index-Tribune

screenshot taken February 12, 2015.

The voters of Sonoma have long been the heroes of their own community's schools, not leaving that role to the State of California.  The electors of the Valley, time and again, have fully committed to public stewardship of our educational infrastructure. As parents (and grandparents), our lived experience shows the enormous benefits to health, safety and education that have always accrued from carefully spending the money necessary to develop the structures, fields and facilities worthy of a Valley as successful as Sonoma.

The men and women of our community have always counted on their educators and trustees to manage — cautiously — the development of our school campuses.  We want our District to be neither the family shopping only for the day's needs at 7-11, nor the one gone Costco crazy.  Instead, we hope they'll be like a mom and dad sitting around the kitchen table, carefully deciding on the nutritious groceries they'll buy for the week ahead, before they go to the store.  For like that family, we as a community know we'll face expenses to maintain our District, and we'll have to frugally weigh options, one against the other.

I think this is the moment that we find ourselves at that table. For notwithstanding the emergence of a second dot-com bubble to our south, interest rates remain at historic lows because investment and demand in America remains depressed.  These conditions were not seen for seventy years, and it is quite possible they will not be seen again for another seventy.   As prudent shoppers, now is the time to write our list of the purchases we know we're going to need — the framework for accelerating our students into the balance of the 21st century that lies ahead.

The green eye shade of the accountant, and the graphs of the economist make the dry case for improving our schools — that action now can reap outsized dividends, consequences we will see in the improved living standards and enhanced productivity of our entire community. But it is our concern for justice that should ultimately resolve questions in favor of an investment in our shared future.  It is no accident that I started this section with a rewrite of the first sentence of David Copperfield, Dickens' story of individual perseverance despite an undisciplined heart. Our shared belief is that America is defined by the notion that the condition of your birth does not determine the outcome of your life, a truth voiced by both Paul Ryan and Elizabeth Warren. Whether Republican or Democrat, liberal or conservative, our covenant with our future selves is that education will remain the key to unlocking the American Dream.

However, it is our common fear that each element that leads to such success is eroding before our eyes. We find ourselves in a time where educational opportunity in the United States has become inverted. We are one of only two members of the G20 that spends more on richer students than poorer (the other is Turkey). We cannot rely on the State of California to resolve these issues for us. Our Governor is backing away from California's School Facilities Program.  The State is essentially leaving Districts like ours on their own in providing for future school facilities and modernization.

This is where the case for implementing the District's master plans, now,  for all of the campuses, finds real traction. As Winston Churchill said, "we shape our buildings; thereafter they shape us."  The voters of Sonoma have a once-in-a-generation opportunity to shape the future of the Valley for decades to come — and there is no one else ready, willing, and capable of doing so. We can put in place the scaffolding our students, the voters of tomorrow, will need to succeed.  

We have an opportunity to make educational equality more than a dream.  We have a chance to make it a reality.  

---

So despite being another year older, I found in the faces of our students reason for optimism.  But I also found a challenge and a call to action.  Rare indeed are opportunities such as the one available to the voters of Sonoma today. It is my hope, and indeed I believe we can make it our shared goal as a community, for us all to pull together to create the infrastructure to match the performances being delivered by our teachers and students.

And so I say to the students who gave me a resounding cheer today when their principal told them all it was my birthday, that we can see that they are doing their part.  And that I hope that, as voters, that we will now be able to do ours.

Turnout, Serrano, and the Outlier.

Percentage Voter Turnout Above (Below) Expected

Versus Number of Registered Voters

California Primary Election, June 4, 2014
Results available at http://tinyurl.com/l3xbpqw  

Back in June of 2014, I took a look at the provisional results of the California Primary. It was partly due to a comment in a newspaper article arguing the Bay Area leads the State in voter turnout.  Based on the data, I concluded
that the northern counties, and those of the Sierra foothills should really hold the title.

I've wanted to revisit the final results for a while. I did so today. The coefficient of determination was essentially unchanged (R²=.757 versus R²=.758). In doing so, though, I realized there was a way to get at the point Paul Mitchell, the vice-president of Political Data Inc., had made to the newspaper reporter that led to my post in the first place.

Paul had contended that "[p]oor people from Sonoma are far more likely to cast a ballot than someone living in poverty in Echo Park [Los Angeles]." This time, after plotting the results, I then set the y-axis to 100% of turnout as predicted by the trend line, leaving the x-axis at the number of registered voters per county.  Graphing the data this way actually supports Paul's argument – that Sonoma County is the outlier from the trend.  Sonoma County comes in at 137% of expected turnout, the highest in the table.

Voter turnout has been on my mind because of a line from Serrano v. Priest that's come up here before.  In contemporary discussions of education, the "twin themes" of the Serrano I decision tend to be collapsed into one – "[t]he pivotal position of education to success in American society."  But it is the second of the twin themes, where Serrano I finds its support in Brown v. Board of Education, that causes me to return to this data.

I hand the microphone to California's former governor, circa 1954:

"[E]ducation is perhaps the most important function of state and local governments. Compulsory school attendance laws and the great expenditures for education both demonstrate our recognition of the importance of education to our democratic society. It is required in the performance of our most basic public responsibilities, even service in the armed forces. It is the very foundation of good citizenship." [Emphasis added.]

The language is lofty, but not complicated. Democratic society is (of course) based on voting. In performing that public responsibility, education is a lens allowing us to distinguish the differences between competing choices. But Earl Warren (and a unanimous Supreme Court behind him) say it's more – that education is the foundation of good citizenship. Education doesn't just help us when we step into the voting booth, it shows when we choose to go to the polls in the first place.  Education is the self-evident spark, pump primer, and boot loader of democracy.

And so I take that proposition, and come back to the graph once more.  And I ask myself – is it education in Sonoma County that has led to this result?

And if I accept for a moment that the statement is true, I then must turn to the far more difficult question.  For what, then, would I point to about Sonoma County that has made this difference?

And what can the rest of California learn from Sonoma's experience?

@RobertJShiller and the #EMRATIO.

There's been a tendency, every spring since the start of the Lesser Depression, for the business community to express, hopefully, that "this will be the year things turn." The first post I wrote noting this theme was on March 8, 2013. I thought this morning that, two years later to the day, I'd revisit the question.

Civilian Employment-Population Ratio

Federal Reserve Bank of St. Louis

available at http://research.stlouisfed.org/fred2/graph/?g=13nE

I've been keeping an eye (thanks to Brad DeLong) on the Civilian Employment-Population Ratio from the St. Louis Fed for some time. It is generally the best measure of labor market conditions. If the economy rallies strongly, this is the ratio that should change substantially.

In March of 2013, the ratio was at 58.5. As of February 2015, it's at 59.3; the graph is on the right. There's essentially been no movement.

At the same time, though, the Shiller P/E Ratio, as of February 13, 2015, passed its pre-financial crisis high. This past week, the NASDAQ closed above 5,000 for the first time since the dot-com bubble. There is some local evidence of a speculative real estate bubble. Shiller himself recently released a new edition of his "Irrational Exuberance," where in the preface he expresses surprise at the events that have followed “the bursting of the speculative bubbles that led to the 2007-9 world financial crisis”:

"[E]vidence of bubbles has accelerated since the crisis. Valuations in the stock and bond markets have reached high levels in the United States and some other countries, and valuations in the housing market have been increasing rapidly in many countries."

So the data is there to support a narrative of asset price inflation unsupported by fundamentals, rather than the hopeful mantra of Main Street.

It is, of course, the why of this situation that is so puzzling to so many. If the economy presents meager prospects, shouldn't prices adjust to reflect? It is always tempting to fall back on Thomas Sargent and simply say that in an economic equilibrium, people are satisfied with their choices, and to add Herbert Stein's observation that "[i]f something cannot go on forever, it will stop."  But Shiller himself offered a potential explanation on why this phenomenon recurs, and I found that his point resonated, and so I link to his piece in the New York Times from last month:

"When there is unusual uncertainty about the future, and if not enough new business initiatives can be found to increase the supply of good investments, people will compete to bid up existing investable assets. They may go so far in bidding up prices that even though the assets may have horrible prospects, people will still want to hold them because they feel they have to save somewhere."

Nothing So Dear as #cheapmoney

Over the past few years, I've heard from time to time in conversation the desire to take advantage of "cheap" fixed-rate money, before inflation sets in. 

Board of Governors of the Federal Reserve System (US)
10-Year Treasury Constant Maturity Rate [DGS10]
retrieved from Federal Reserve Bank of St. Louis [FRED]
January 30, 2015, available at http://tinyurl.com/kmtq4sl

On the right is a graph (it's actually a composite of some screenshots) from the Federal Reserve Bank of St. Louis.  I've marked when I was born, and when I graduated from high school. At my birth and graduation, the yield on the 10-Year Treasury was nearly identical (~7.5%, ~33 basis points apart). Between those dates, the yield was almost always higher, often much higher; since then, it's almost always been lower, mostly much lower. As of 30 January 2015, the yield is 1.64%.

Everyone carries a memory of economic history in their head. As Owen Zidar points out here, it changes more slowly than the speed of circumstances. Brad Delong has consistently argued for the necessity of all of us to "mark our beliefs to market." He maintains a list of prominent economists and institutions who've argued inflation was the foremost concern facing the U.S. economy since 2007 -- and not for the purpose of congratulating them.

Like the economists Brad lists, our formative memories were constructed during a different time. Inflation expectations became anchored. But there are few atheists in foxholes during combat, and for similar reasons, I suspect that inflationistas in debt are rare during deflation -- for falling prices routinely bankrupt entrepreneurs. There is oftentimes nothing so dear as "cheap" money.