Friday, January 3, 2014

Pat Forgey's selective (and misleading) reporting ...

Yesterday the House Task Force on Sustainable Education issued an interim report (the Task Force is not set to expire for another year) on its findings to date.  The report is available here.

Among the findings is the following:
In order to provide for an overall sustainable future for Alaska, current state spending levels must be reduced with a portion of the current revenue stream to be set aside to provide for future generations. Further, it was recognized that education is one of the core constitutional missions of state government and therefore, funding to education should be given a priority. However, Alaskans should be made aware that current education spending is not sustainable.
That finding was the subject of much, and widely reported, debate during the Task Force's final meeting of 2013, held on December 31.  Among other places, reports on that debate can be found here and here.  Those are largely well based, fact pieces.

Yesterday afternoon, however, the Alaska Dispatch's Pat Forgey tried to spin the story in a new direction.  In a story headlined, "Prepare for huge cuts in education spending, legislative panel warns," Forgey claimed that "[t]he House Sustainable Education Task Force is calling for sharply reduced spending on schools."

The story implied that its conclusions were based on the August 29th meeting of the Task Force -- in which I participated and are also covered in this blog.  But neither that discussion, nor Forgey's reporting of it justify the assertion that the spending reductions are "huge" or anticipated future spending levels "sharply reduced."

The record of the August 29th meeting, including both the portion discussed in Forgey's article and the slidepack that accompanied the presentation, make clear that what was under discussion at that session was rolling back total education spending --  operating and capital combined -- only to FY 2011 levels (three short years ago).  As I explained during that meeting, I used FY 2011 because it was consistent with the overall budget levels suggested early last year by the University of Alaska - Anchorage's Institute of Social and Economic Research.

Focusing on operating spending flowing through the Department of Education and Early Development, that would result in a rollback in spending from the roughly $1.28 billion in Unrestricted General Funds (UGF) contained in the FY 2014 budget, to $1.17 billion (UGF) contained in the FY 2011 budget, a reduction of less than 9% (compared with Forgey's claim of 17+%).  Even that significantly overstates the case, however, because additional reductions in capital spending levels related to education easily could be used to offset the difference, holding overall operating spending constant or even slightly increased from FY 2014 levels.

For example, FY 2011 was a record year for state payments in support of school construction.  Reducing that to the average level experienced during the subsequent three years frees up nearly an additional $60 million for operating spending, making the resulting difference between the two years only $50 million (or 4%).

Forgey's story never mentions the FY 2011 baseline.  Instead, Forgey supports the story's headline using a hypothetical calculation he makes up, late in the story, based on the unfounded assumption that the Task Force is suggesting that the state budget should be lowered immediately to current revenue levels, with education cut proportionately with all other programs in order to reach that objective.

None of the statements made at the August 29th meeting, the December 31st meeting that led to the interim report, nor the interim report itself support such a hypothetical calculation.  Instead, Forgey simply is making up his own facts to support his own, sensationalized conclusions.

Forgey's story also errs in one other respect.  In an aside aimed at SB 21, Forgey claims that "Senate Bill 21 resulted in Alaska passing its first deficit budget in years ...."

As ISER pointed out in its analysis last year, before SB 21 was introduced, recent spending levels are significantly outpacing the revenue levels produced under ACES.  As ISER said at the time, based on revenues projected under ACES:
... the state is on a path it can’t sustain. Growing spending and falling revenues are creating a widening fiscal gap. In its 10-year fiscal plan, the state Office of Management and Budget (OMB) projects that spending the cash reserves might fill this gap until 2023....
But what happens after 2023?  Reasonable assumptions about potential new revenue sources suggest we do not have enough cash in reserves to avoid a severe fiscal crunch soon after 2023, and with that fiscal crisis will come an economic crash. 
Forgey's effort to attribute the state's fiscal situation to SB 21 is as wrong as his claims of "huge" cuts and "sharply reduced" spending.  To quote ISER's words -- not mine -- at recent spending levels the state is headed for "fiscal crisis" and "economic crash" regardless of which tax regime applies.  It is not SB 21 that is driving that train, it is the state's current spending levels.

All of these are things that I could have explained to Forgey if he had contacted me before making up his own numbers and running with the resulting story.  He didn't, however.  The result is selective and indeed, to the extent the headline and text claim "huge" cuts, "sharply reduced" spending and that SB 21 is resulting in Alaska's current fiscal situation, misleading reporting.

We should expect better from a news source that claims "to take an unflinching look at the state, from its massive riches to its abject poverty, and tell these stories to Alaskans and to the world."  Sometimes it seems that "unflinching look" is made only through a skewed filter.  This clearly is one of those times.