Today's Fair Shots - April 20th, 2017

1-House Consideration of School Finance System Is First in Decades

2-Lowenstein: CEO Pay Problem May Be Fixable

1. The Texas House debated a school finance bill into the evening. While prospects for the bill depend heavily on the Senate, this is the first time in many years that a finance measure is being considered seriously, and maybe the first time ever it is being considered seriously when the state is not under court order.

  HB 21, which yesterday received the United Labor Legislative Committee endorsement, drew this analysis from our Brothers and Sisters in Texas AFT:

  Scheduled for state House floor consideration on Wednesday is HB 21, the bill by Rep. Dan Huberty (R-Houston) to revise school-finance formulas and increase school aid to districts. The bill would increase aid to school districts by more than $1.5 billion, raising average annual formula funding per pupil by $210. Texas AFT supports the bill. HB 21 stands in marked contrast to the Senate approach on school funding, which would leave per-pupil funding static.

  A number of good amendments among the 46 pre-filed amendments to HB 21 would focus more funding on prekindergarten and bilingual education. Other good proposals would call for a comprehensive study of the outdated funding elements that inadequately support educational services to students who need extra help and inadequately recognize regional cost variations. One noteworthy positive amendment by Rep. Nicole Collier (D-Fort Worth) would eliminate a distortion in current law that gives charter schools on average an advantage of $800 per pupil over traditional public schools when it comes to operating funds.

  On the negative side of the ledger, one especially noteworthy proposed amendment is a strange one to see on a school-finance bill. This proposal by Rep. Sarah Davis (R-Houston) apparently aims to compel Houston ISD, the largest district in the state, to transform four seats on the school board into at-large positions; all nine seats on the board now are filled in single-member-district elections.  If Houston ISD declined to bow to this demand, the district under this amendment would lose its state funding.

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2. Journalist Roger Lowenstein, a colleague of Texas AFL-CIO Communications Director, Ed Sills, on The Cornell Daily Sun many years ago, chose to cover city news rather than campus news, which was off the beaten path. He proceeded to rack up an impressive record of beating the pants off the Ithaca Journal on local stories that were both under their noses and, in other cases, truly enterprising. Later, Lowenstein became a respected financial reporter and commentator. 

  While he is certainly not going to be mistaken for a union activist, Lowenstein gathered some interesting ideas on runaway CEO pay in Fortune magazine that may be worthwhile for union activists to consider:

  This past march, Walt Disney Co. (DIS, +0.33%) settled a claim by the Department of Labor that it had violated the law by deducting the cost of uniforms from employees' wages-which brought the workers' pay below the federal minimum wage. The violations, which occurred at Disney facilities in Florida over the past few years, didn't add up to a lot of money. Disney will pay back wages of $3.8 million to 16,000 workers (about $230 per employee). What made the story galling is that the entire expense is roughly in line with what Robert Iger, Disney's CEO, earns in a single month. Last year Iger netted $44 million.

  Excessive CEO pay is hardly a new topic, but with the urgent concern over economic inequality, it's a timely one. I thought about the Disney story while reading Steven Clifford's The CEO Pay Machine: How It Trashes America and How to Stop It. The author imagines a better future-one in which compensation packages would be simplified, CEO pay would be downsized, and incentives would be properly geared toward companies' long-term success...

  It wasn't always this way. In 1978, CEOs earned 30 times the take of the average employee; now, according to the Economic Policy Institute, they get 276 times as much. These numbers betray an attitudinal upheaval. Time past, a CEO's pay was set on a scale with others in the same organization. This was dubbed "internal equity." But in the 1980s, a consultant named Milton Rock sold the idea of "external equity." Now, as if CEOs belong to a tribe of superhumans, they are paid on a scale with only their "peer CEOs."...

  How to break the cycle? In Clifford's ideal, CEOs would get a salary and restricted stock-and nothing more. The stock couldn't be cashed until retirement, and half of it would be canceled if shareholders didn't realize an above-average return over the CEO's tenure.

  To induce boards to consider such radical change and to lower total compensation, Clifford suggests a federal luxury tax, a dollar-for-dollar tax on executive pay in any form above $6 million a year. Politically, that will be a tough sell. A less intrusive alternative, I think, would be to give more power to the shareholders who own the store. A rule enacted in the Dodd-Frank reforms requires nonbinding shareholder votes on executive pay. Why not tweak the rule so that on pay packages above a certain threshold-say $5 million-their vote is binding? Some companies would still pay more. But to avoid a vote and potentially messy publicity, a lot of boards would hold the line at $4.99 million.

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