The Maine Heritage Policy Center » Research http://mainepolicy.org Maine's Preeminent Free Market Policy Think Tank Wed, 22 Jul 2015 14:42:45 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.2 Blended Learning: Nexus Academy of Indianapolis (Case Study 3) http://mainepolicy.org/blended-learning-nexus-academy-of-indianapolis-case-study-3/ http://mainepolicy.org/blended-learning-nexus-academy-of-indianapolis-case-study-3/#comments Fri, 18 Jul 2014 14:29:28 +0000 http://www.mainepolicy.org/?p=3694 Continue Reading →]]> In the Midwestern United States, one charter school’s approach to blended learning was ambitious right from the start. The first five Nexus Academy schools – three in Ohio (Cleveland, Columbus, and Toledo) and two in Michigan (Lansing and Grand Rapids) all launched on the same day: September 4, 2012. All were conceptualized, designed and launched as fully blended schools from the beginning, with the goal of creating an altogether different kind of high school. Nexus Academy schools are public and free to all students.

According to the founders of Nexus, the goals were to preserve the personalization of virtual schooling while providing a physical space that inspires learning. The Nexus model allows flexibility and freedom of movement for students, uses individual student learning data (as opposed to the rotational clock) to arrive at the appropriate balance between face-to-face and online instruction, and provides an innovative staffing model with altogether new roles for teachers and mentors. In this model, teachers and mentors focus on the academic and emotional well-being of each student.

The early results for Nexus Academy are very promising. At the end of its first school year (2012-13), the Nexus Academy network of schools saw 92 percent of its seniors graduate, with 95 percent of those graduates being accepted into college. Comparatively, the student graduation rates for Michigan and Ohio are 74 percent and 80 percent, respectively.

Blended Learning at Nexus

What sets Nexus Academy apart from traditional public schools and other public charter schools is a unique approach to campus space and student freedom, a strategic delivery of online learning, and a reliance on data to drive students’ daily experience.

Nexus students attend classes at a brick-and-mortar location four days a week. The schools are small by design, with an average total 9-12 grade enrollment at 300. According to the academy’s founders, recent research has shown that smaller, more intimate school environments can boost performance and graduation rates.

Students choose whether they will go to class in the morning (8:00 AM – 12:00 PM) or in the afternoon (12:30 PM – 4:30 PM). Morning sessions are held Monday through Thursday and afternoon sessions are Tuesday through Friday. Students typically spend fourteen hours per week on self-directed online lessons off campus, a.k.a. homework. This scheduling system serves two purposes. First, it ensures an optimal student-to-staff ratio throughout the week; and second, it allows students to engage in internships, take college classes, or pursue extracurricular activities such as athletics or performing arts.

Nexus gives students a great range of freedom during the typical school day. Its approach to campus space and school day structure is more akin to a college campus or modern office than a traditional school. Rather than a typical classroom – chalkboard at the front and rows of forward-facing desks – Nexus campuses have subject-specific classrooms, large open spaces with various workstations, and “team zones,” where students can collaborate on projects.

The typical school day begins with an advisory session, during which students engage in collaborative activities and skill-building exercises with their “Success Coaches,” who serve as personal student mentors. The advisory sessions are followed by small-group face-to-face classes with English and math teachers who help students master concepts. The remainder of the school day is spent in online coursework and virtual classes.

Teachers remain the mainstay of students’ learning experiences. They are the knowledge authorities and they deliver traditional lectures on core subjects. Nexus provides an all-digital curriculum taught by teachers who work with students, either face-to-face (math and English) or online (all other subjects). Teachers’ efforts are bolstered by the Success Coaches, who develop one-on-one relationships with students and can tailor an educational experience to a student’s specific needs and interests. Success Coaches serve as advisors and mentors to students, while also providing a critical link between parents and teachers. Each coach works one-on-one with students to identify strengths and weaknesses, develop action plans, set goals, and deliver individualized help when it is needed.

Students are free to tackle their work from almost anywhere on campus, and they can even listen to their choice of music while they work. They are guided by an online planner that shows which lessons and assessments they need to complete for a given day. Success Coaches monitor the lesson planner to ensure a student is staying on track, and parents can access similar information from an online Web portal to see how their son or daughter is performing.

Both the teachers and the Success Coaches benefit from unique technologies as they work to provide a customized learning experience. “Nexus Academy is a high school designed around each student from the ground up, with the daily routine driven by data about his or her learning and activities designed to maximize both academic performance and social and emotional growth,” said Mickey Revenaugh, executive vice president and co-founder of Connections Education.

The Tech

The Nexus Academy approach to blended learning leverages advanced technology to provide students with customized educational experiences, and parents with unprecedented insight into their child’s progress.

Nexus uses two proprietary technologies to facilitate blended learning. The first is Connexus, an education management system provided by Connections Education, a subsidiary of Pearson. The second is LiveLesson®, an online tool, also provided by Connections Education, which allows students and teachers to interact through a virtual classroom.

Parents can use the portal to track their student’s progress, monitor performance, and communicate with teachers through secure message boards. Students use the same portal to measure their own progress, explore diverse educational resources, and learn about the extra-curricular activities available to them.

LiveLesson® serves as an online alternative to the brick-and-mortar classroom. The online classroom allows students to experience lectures remotely, view teachers’ instructions via a digital whiteboard, and answer questions posed to the class. Students can ask questions of their teachers and peers as they collaboratively explore new concepts and subject matter. Sessions on LiveLesson® can include an entire classroom, a small group, or even one student.

Data on student performance is also used to “dynamically group” students who need help with, or who excel in, certain subject areas. These groups are rearranged every 4-6 weeks. This classroom arrangement is vastly distinct from traditional public schools, where age is the primary determinant of student grouping. Nexus’ focus on data, however, ensures that similarly advanced students learn together, which is far more efficient.

Another thing that makes the Nexus approach to blended learning distinct from other schools is its broad offering of electives. In addition to the usual core offerings of language arts, math, science and social studies, Nexus provides access to a diverse slate of elective courses.

Unlike most American high schoolers, Nexus students can take courses in journalism, marketing, art history, sports management, up to six foreign languages (including sign language), marine science, psychology, and computer programming. The school also offers a full array of Advanced Placement and Honors courses for students who excel. Perhaps the most original element of Nexus’ blended learning model is Juilliard eLearning – an innovative partnership with the Juilliard School that equips students to learn and play music.

Nexus Principal, Jamie Brady, is a veteran educator who believes that blended learning is the way of the future for American education.

“I have watched education evolve over the past 17 years and I am amazed that some educators still believe that standing up in front of a classroom, writing on a chalk board, and lecturing to young children is impactful and beneficial,” Brady told a local newspaper last year. “We are educating our future leaders and we better make sure they are prepared to compete in a global economy,” she said.

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Blended Learning: Rocky Mountain Prep (Case Study 2) http://mainepolicy.org/blended-learning-leveraging-teachers-and-technology-to-improve-student-outcomes-case-study-2/ http://mainepolicy.org/blended-learning-leveraging-teachers-and-technology-to-improve-student-outcomes-case-study-2/#comments Thu, 19 Jun 2014 20:54:38 +0000 http://www.mainepolicy.org/?p=3678 Continue Reading →]]> In southeast Denver, Colorado, one young public charter school is using blended learning to serve at-risk elementary school children – and it is generating some impressive results.

Rocky Mountain Prep (RMP) is spearheaded by founder and CEO James Cryan, a 2007 graduate of Colby College in Waterville, Maine. After teaching for two years in a traditional public school through Teach for America (TFA), a program that places recent college graduates in challenging classrooms with at-risk students, Cryan got his MBA from Daniels College of Business at the University of Denver. In July of 2010, he decided to take the TFA model, add innovative technology-based instruction methods, and start a public charter school serving at-risk youths.

RMP opened for the 2012-2013 school year to students from pre-kindergarten to 1st grade. That year, the school’s enrollment totaled 131 students. The following school year, RMP expanded to 2nd grade and enrolled 289 students. The school’s expansion plans are ambitious: Cryan and the school’s supporters plan to add one grade level every year until 2016, when the school will serve pre-K through 5th grade.

Class is in session at RMP 5 days a week, from 8:00 AM to 4:00 PM. RMP uses an extended school year, so kids attend from mid-August to late June, but vacations are a bit more frequent, with students taking a week off every eight weeks.

The Denver Public School system uses a novel approach to enroll students in public charter schools. The state provides an online application – DPS School Choice – for parents to review and select schools for which their children may apply. DPS then uses information from the application, such as top school choices, learning preferences and student characteristics, to place the student at a school within the system. In cases where more students apply than a school can accommodate, students are randomly assigned a lottery number.

Because it’s not a traditional public school, RMP can choose from a broader array of talented, energetic individuals to serve as educators. In the most recent school year, RMP operated with a staff of 34, including Cryan, plus 15 teachers and eight teaching fellows.

RMP teachers are highly qualified and are required to have at least a Bachelor’s Degree, but may or may not have a Colorado teaching license. This means that a college graduate who has a passion for teaching, but who has not majored in education or attained a teaching certificate, can find an opportunity to change lives. RMP capitalizes on those with an interest in education through its Teaching Fellows. The fellows work alongside teachers to serve as personal mentors for students. Paid with stipends, fellows are typically recent college graduates who are interested in the education field.

RMP’s teachers do not belong to a teachers’ union, but the teaching positions are highly sought after nonetheless. The school offers a competitive benefits package and a retirement plan comparable to those available at traditional public schools. According to Cryan, the school received more than 2,200 job applications last year from individuals seeking a teaching or teaching fellow position.

“What we found is people are very interested in working in a high performance environment,” he said. “We believe really deeply in the power of school culture. We work really intensely to create a culture of rigor and joy. Our kids are really happy coming to school, and personalized learning supports that.”

RMP predominately serves at-risk students. In the 2013-2014 school year, 83.7 percent of RMP students received free or reduced lunch – a key indicator of socio-economic status. Four out of five students were of racial or ethnic minorities and roughly one-third were English language learners. Considering that the students tend to come from poorer families and families that are struggling to overcome cultural and linguistic barriers, you might expect them to lag behind peer schools in terms of performance.

Not so, says Cryan.

“We had incredible results last year,” he said of RMP’s inaugural school year.

RMP students averaged about 1.5 years progress in reading growth and 1.7 years in math, he said, excelling beyond peers at similar Denver-area schools. He said RMP students went from 20 to 87 percent proficiency in reading.

“Our mission is to close the opportunity gap that exists in public education between low income students and their wealthier peers,” he said. “We provide every kid a learning experience that gives them the tools that they need to be successful.”

For RMP, those tools are the components of a blended learning model: teacher instruction, personalized mentorship, and self-directed learning via digital platforms.

Rocky Mountain Blended Learning

Like other blended learning schools, RMP uses a rotational model where a typical student’s day is divided between small group instruction with their peers, student-led learning sessions with specialized software, and one-on-one targeted help with teachers and/or teaching fellows in areas of weakness. Each classroom is equipped with a lead teacher, who delivers traditional subject matter instruction, and a teaching fellow, who serves as a mentor for individual students.

When students are not engaged in classroom instruction or one-on-one sessions with mentors, they are working independently on coursework delivered through innovative computer programs. The computer program replaces one-size-fits-all worksheets and offers each student a learning program customized to their needs and capabilities. Additionally, the blended learning model leverages young students’ familiarity with devices such as computers and tablets to provide instruction in an engaging and entertaining way.

For math, RMP uses ST Math, an interactive learning application from the MIND Research Institute. The “ST” stands for Spatial-Temporal, which reflects the programs method of teaching math through visuals rather than through text – a method that arose out of neuroscience research at the University of California. The program is also game-based, which adds a spirit of fun to keep children intrigued.

For literacy, RMP uses Reading A-Z, an online reading program used in more than 250,000 schools worldwide. The program can be used individually by students or for a teacher-led session involving the entire classroom.

In addition to the traditional core subjects of language arts and math, RMP currently offers the following extracurricular activities: dance, soccer club, hand bell choir, theater and Arabic language instruction.

Online learning comes with three major advantages over traditional lecture-based, homework intensive instruction.

First, the online applications RMP uses can automatically individualize instruction to every student’s level of understanding. For example, the computer program will deliver more challenging questions to a student who is highly proficient at fractions while a child who is struggling with that subject will face less difficult questions. This method ensures that students are not tasked with exercises that are above their level of understanding, yet it also guarantees that every student is challenged as much as possible. Regardless of ability level, every student is challenged in a way that fits their ability level, thus maximizing the productivity of online learning sessions.

Second, online learning provides teachers with instant, individualized progress reports for every student. Within minutes after students have completed an online work session, a teacher or teaching fellow can log into the backend of the program to assess student performance. The same performance metrics are available to parents, who can use the online platform to track their child’s progress in real time.

Educators can tell that Jennifer has mastered second grade reading material, but that Benjamin is still struggling. Armed with that information, they can push Jennifer into more advanced reading assignments while spending more time helping Benjamin overcome any obstacles he’s facing. Ideally, this kind of customized learning already happens in traditional public schools. Fortunately, with RMP’s blended learning model, it happens every day, with every student, without fail.

With these daily progress reports, online, blended learning serves to compliment traditional instruction. “Teachers know how their kids are doing based on assessments and they use that to plan instruction for kids in small groups or one-on-one,” said Cryan.

Third, RMP’s online learning platform offers two content-based advantages over traditional public school methods. First, because curriculum content is delivered online, the reading materials cost a fraction of what it takes to print books. And second, the online content allows reading content to be updated as current events unfold, or as scientific concepts are revised. Texts can also be custom fitted for state learning standards.

All of these advantages – customized learning, instant performance feedback, and cost-effective up-to-date content – are made possible by RMP’s leveraging of the blended learning model.

RMP is supported through a combination of public and private funding. Although the school’s goal is to run efficiently on its public funding, it has benefited enormously from charitable giving. These gifts, said Cryan, have allowed the school to expand and grow. Charitable support also helped the school overcome start-up costs associated with technology, which includes one personal computer or iPad for every two students.

In addition to state appropriations, the school receives donations from more than a dozen private foundations, including the Anschutz Foundation, the Bill & Melinda Gates Foundation, Broad Foundation, Buell Foundation, Louis Calder Foundation, and Walton Family Foundation.

As is the case with most charter schools, RMP has faced political criticism and pushback. According to Cryan, the biggest fight has been ensuring that, as a charter school, RMP has access to the same resources as traditional public schools.

 “The district has some entrenched political habits that are challenging to break,” he said. “So, when schools like charter schools suggest a new paradigm it can be a real challenge.”

]]> http://mainepolicy.org/blended-learning-leveraging-teachers-and-technology-to-improve-student-outcomes-case-study-2/feed/ 0 Blended Learning: Leveraging teachers and technology to improve student outcomes (Case Study 1) http://mainepolicy.org/blended-learning-leveraging-teachers-and-technology-to-improve-student-outcomes/ http://mainepolicy.org/blended-learning-leveraging-teachers-and-technology-to-improve-student-outcomes/#comments Thu, 15 May 2014 18:48:02 +0000 http://www.mainepolicy.org/?p=3575 Continue Reading →]]> Technology has become a vital part of American life. Combined with the Internet, innovative new technologies bring the information of the world into the palm of our hands. Kids of all ages use iPhones, iPads, Facebook, Email, Wikipedia and myriad other Web-based platforms every single day. Now imagine if we could leverage Web-based technology to deliver a customized, rigorous and creative education to Maine students. The good news is, we can: It’s happening every day in classrooms across the country where students are engaged in blended learning.

So what is blended learning? Blended learning happens any time a student learns in part at a supervised brick-and-mortar location away from home and online with some element of student control over time, place, path, and/or pace. It can be done through traditional public schools or through public charter schools. Wherever it happens, blended learning takes advantage of innovative digital technologies while preserving the socialization of traditional classroom learning. Blended learning combines the best of old and new approaches to education.

The rise of digital learning presents parents, students, teachers, administrators and policymakers with the opportunity to positively transform education in Maine. In the following case study, we’ll explore one school that is using blended learning to make a positive impact on students’ lives.

Carpe Diem Collegiate High School – Yuma

In an Arizona desert town near the Mexico and California borders, an innovative charter school is changing the way American students learn, one child at a time. They’re doing it with a blended learning model that leverages technology – combined with hands-on teacher interaction – to deliver customized learning experiences to every student.

That school is Carpe Diem Collegiate High School and Middle School in Yuma, Arizona – a publicly funded but privately operated charter school – and their unconventional approach to learning is quickly catching on.

Carpe Diem started in 2000 as a traditional public charter school serving nearly 300 students. In 2003, executive director Rick Ogston started to develop a blended learning model. Three years later, the school relocated to a building custom-designed for that model where it continues to offer instruction to students grades 6 – 12. Carpe Diem has since been recognized by BusinessWeek, in 2009, and U.S. News & World Report, in 2010, as one of the top schools in America.

Except for the presence of teachers and students, Carpe Diem has flipped American learning on its head. Students at Carpe Diem attend tuition-free, wear red uniforms and sit at cubicles with their own computers. They attend school four days a week – no school on Fridays – but school days are longer, from 8 a.m. to 4 p.m. Students are typically assigned little or no outside homework.

Students divide their days between work sessions on computers and hands-on learning experiences with teachers. Computer-based exercises are used to introduce and teach concepts. Once students get an understanding of basic concepts, they enter workshops with teachers who refine their knowledge and make it applicable and relevant to real world examples. The school uses 55-minute periods which rotate between online instruction and face-to-face time with teachers for reinforcement and application.

The school has six teachers – one each for math, language arts, science, physical education, social studies, and electives – and a handful of teaching assistants that are assigned to mentor individual students. Each teacher teaches all grade levels in their subject, allowing for continuity of instruction as a student progresses. Carpe Diem compensates teachers at or above local district salaries and offers competitive retirement packages.

Apart from its unique organizational structure, Carpe Diem is most well known as a pioneer in the practice of blended learning. Blended learning is any learning program that combines traditional, supervised brick-and-mortar instruction and schoolteachers with online delivery of curricula and some element of student control over when, where, and how quickly learning happens. Blended learning blends traditional learning with technology-based instruction and gives students a measure of control over their educational destinies.

As Carpe Diem Founder Rick Ogston has said:Graph

“CDCHS is a blended learning school that blends the best of face-to-face instruction, technology, and extended learning opportunities in order to boost student achievement. Kids today are wired in every way… [W]hat we wanted to do was leveraged that experience, that knowledge, that savviness about technology, and bring it into the classroom to where they would also be excited about using their skills to learn the things that we thought would be important for them to learn.”

Technology is a critical part of what is happening at Carpe Diem, but computers alone do not necessarily enhance education. The backbone of the blended learning model is the online program students use. Carpe Diem has used Education2020, an online curriculum provided by Edgenuity, since 2010. The E2020 curriculum delivers subject-specific workshops in math, language arts, science and social studies. The program has produced positive results not just at Carpe Diem, but also at schools in central Texas, Gainesville, Georgia, Louden County, Virginia, Detroit, Michigan, and more.

With heavy reliance on technology, you might be tempted to think Carpe Diem’s model cannot be replicated more broadly. However, compared to average costs per pupil in Arizona and the U.S., Carpe Diem is inexpensive. According to the school, per pupil costs run about $5,303 per year. Comparatively, the Arizona and U.S. average costs are $7,608 and $10,259, respectively.

Carpe Diem’s blended-learning model requires fewer teachers and administrators and this allows the school to spend less per pupil than its peers. According to the 2013 Annual Report of Arizona’s Superintendent of Public Instruction, Carpe Diem’s appropriation for fiscal year 2011 – 2012 was $1.575 million. The school spent $548,497 on classroom instruction, $13,856 on classroom supplies, $598,019 on administration, and $414,087 on student support services. The school’s administrative office is lean. It has two administrators – a principal and a guidance counselor who doubles as an office manager.

Although Arizona’s public charter schools receive roughly $1,700 less per-pupil than its government-run schools, Carpe Diem is producing amazing results with its blended learning model. Compared to other schools in Arizona, Carpe Diem is a tremendous success.

Graph2

The above chart depicts the math growth rates of Carpe Diem (first in growth performance) as compared to other Arizona Schools (representative cross section provided to show variation).

As of 2010, the average Arizona school had 65 percent of students performing at a proficient level. For Carpe Diem, the proficiency rate was 92 percent. Moreover, the school is producing these kinds of results with a demographic and socio-economic mix comparable to other local schools. Forty-six percent of Carpe Diem students receive free or reduced-price lunch and the school’s ethnic composition mirrors that of peer institutions.

Carpe Diem provides one model of blended learning being used successful to improve the education and, ultimately, the well-being of all students. Supporters of the school see it as a project that can help not just students in Yuma, Arizona, but also students across the United States.

“We can scale this and replicate this around the state and around the country,” says Ogston.

And that’s exactly what Carpe Diem’s organizers are planning to do. As of 2012, Carpe Diem schools are operating in Indianapolis, Indiana and Cincinnati, Ohio. While the Carpe Diem schools are relatively young, all evidence suggests the blended learning revolution is having a positive impact on student outcomes.

GS4M Blended Learning 20140514

Click here to download the case study.

 

 

]]> http://mainepolicy.org/blended-learning-leveraging-teachers-and-technology-to-improve-student-outcomes/feed/ 0 Exit RGGI: The Potential Economic Impact of a Maine Withdrawal from the Regional Greenhouse Gas Initiative http://mainepolicy.org/exit-rggi-the-potential-economic-impact-of-a-maine-withdrawal-from-the-regional-greenhouse-gas-initiative/ http://mainepolicy.org/exit-rggi-the-potential-economic-impact-of-a-maine-withdrawal-from-the-regional-greenhouse-gas-initiative/#comments Fri, 28 Mar 2014 14:17:37 +0000 http://www.mainepolicy.org/?p=3356 Continue Reading →]]> Executive Summary

The Regional Greenhouse Gas Initiative (RGGI) is a carbon dioxide cap and trade agreement between nine states in the Northeastern United States. RGGI Inc. is the entity responsible for managing the goals of the law. RGGI determines a limit on the amount of carbon dioxide (CO2) emitted by all of the regulated electric power plants in the region equal to a total number of tons per year. Each state agrees to issue a fixed number of allowances corresponding to this limit, proportional to the number of power plants in the state.

To estimate the economic effects of a hypothetical departure by Maine from the RGGI the Beacon Hill Institute applied its Maine STAMP® (State Tax Analysis Modeling Program).  Since its inception in 2008, Maine’s qualified electric producers have paid over $48 million dollars to purchase almost 20 million allowances for an average cost of $2.41 each. Maine Efficiency Trust is the largest beneficiary of proceeds from the auctions, which the trust uses to fund energy efficiency and renewable energy programs.

In 2013, RGGI changed its “Model Rule” to cut the number of allowances available for auction by almost half to 91 million short tons starting in 2014. As a result, allowance prices increased dramatically. RGGI’s own analysis indicates that allowance prices will more than double to $6.02 per ton in 2014 and increase to $8.41 by 2020 under their baseline scenario, and skyrocket to $7.27 in 2014 and $10.15 in 2020 under a high cost scenario.

We base our estimates on the emissions cap and auction prices from RGGI’s 2012 Program Review. We provide two estimates: (1) using the RGGI reference case allowances prices and (2) the prices at which cost containment provisions would be triggered. Our major findings show that Maine exiting the RGGI program will:

  • save affected electricity producers and thus consumers $106 to $132 million from 2015 to 2020;
  • raise employment by an expected 270 to 330 jobs over the period;
  • increase real disposable income by $10 million to $11 million; and
  • boost investment by $5 to $6 million.

Introduction

The Regional Greenhouse Gas Initiative (RGGI) is a carbon dioxide cap and trade agreement between nine states in the Northeastern United States — Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. Its purpose is to reduce carbon dioxide emissions from electric power plants.[1]

Cap and trade programs are designed to limit pollutants generated by power plants while providing flexibility in the methods used to comply with the limits. Power plants obtain tradable permits to emit specific amounts of a regulated substance. The number of permits is limited by a regulatory agency or by direct legislation. Permits are either issued to sources at no cost or sold at auction. They are then traded among firms. The requirements to use the permits and the market for a finite number of permits together generate costs that are designed to provide an incentive for firms to reduce the amount of pollution they emit. At the same time, trading introduces flexibility, intended to encourage innovation and minimize economic disruption.

The first cap and trade program in the United States was the Acid Rain Program of the U.S. Environmental Protection Agency, which began in 1995. Power plants were given permission to emit an amount of sulfur dioxide as a percentage of output. Subsequent modifications implemented in 2000 increased the scope of the program, lowered the percentage of emissions allowed, and capped the amount of sulfur dioxide that could be generated by all of the regulated power plants combined.[2] There is strong evidence that cap and trade to curb acid rain did effectively cut down on sulfur dioxide emissions but replicating such a program for greenhouse gases could be far more challenging.[3]

How RGGI Works

RGGI determines a limit on the amount of carbon dioxide (CO2) emitted by all of the regulated electric power plants in the region to a total number of tons per year. Each state agrees to issue a fixed number of allowances corresponding to this limit, proportional to the number of power plants in the state. The majority of these permits are sold at auctions managed by RGGI that are held four times a year.

RGGI, Inc. is a non-profit corporation with no regulatory authority. Instead, it drafts a comprehensive regulatory program called the Model Rule, which must be adopted by the legislature in each participating state.[4] RGGI, Inc. provides services through subcontractors to implement the regulations including monitoring emissions, compliance and managing the auction process. Its operations are funded by the states that contract with RGGI to administer the program. The RGGI, Inc. Board of Directors consists of two representatives from each state who are heads of the member states’ environmental regulatory agencies.[5]

Each state enacts its own regulations based on the Model Rule, with some variation allowed outside of the core program.[6] RGGI, Inc. grants each state a number of allowances that are sold at quarterly auctions. One allowance permits a power company to emit one short ton, or 2000 pounds, of CO2. For the first three years of the program, the total number of allowances was fixed at 188 million short tons.[7] These allowances can be traded on a secondary market, and regulated power plants can use CO2 allowances issued by any participating state. In addition to these allowances, the first Model Rule provided for allowances based on certifiable reductions in CO2 emissions during the three years prior to the implementation of the program.[8] There are also provisions for allowances to be issued for voluntary renewable energy programs and optional limited industrial exemptions.[9]

The Model Rule defines a control period of three years. The first control period included the calendar years from 2009 to 2011. By March 2012, each power plant was required to submit a number of allowances equal to the tons of CO2 emitted during the control period, or be subject to penalties determined by the state regulatory agencies. A provision to extend the control period by one year in case the price of an allowance reached a particular value was adopted. This ceiling was never reached, and the second control period began on January 2012.

The Model Rule —and consequently the regulations imposed by the member states— apply to any fossil-fuel generator with a nameplate capacity equal to or greater than 25 megawatts of electricity.[10] Nameplate capacity is defined as the maximum sustained electricity output that a power plant can generate during operation unrestricted by external factors such as fuel supply or seasonal restrictions.[11] Such a generator is called a unit, and a source is a company that owns one or more units. CO2 output and allowances pertain to sources. Currently, RGGI applies to 167 power plants.[12] States have the option to grant exemptions to power plants under certain conditions.

Auctions for allowances are managed by RGGI, Inc. and are held quarterly. Each state has the option to offer allowances for sale, and in general, all states offer most of the allowances that they have to sell.[13] From the first auctions in September and December 2008, prior to the beginning of the first control period, to mid-2010, all available allowances were purchased. During this period, the clearing price fell from an initial price of around $3.00 to less than $2.00. Subsequently, until the end of 2012, some percentage of allowances were unsold at each auction, and the price of an allowance remained under $2.00 as it became clear that CO2 emissions for the control period would fall below the regional cap. Most of the unsold allowances were retired; that is,
they were not allocated or reserved for future allocation by the states, but were removed from circulation. Throughout 2013, in anticipation of the stricter regulations that came into effect at the start of 2014, all permits have been sold at each auction, and the price has fluctuated around $3.00.

Initially, the goal of RGGI was to stabilize CO2 emissions generated by regional power plants at current levels and then reduce them gradually by ten percent by the year 2016. The initial cap was 188 million short tons, which was reduced to 165 million short tons after the withdrawal of New Jersey at the end of 2012. At the time the program was implemented, CO2 emission levels had already fallen substantially, and continue to fall. This was due to the economic downturn that began in 2008 and to an increase in the use of natural gas, which emits less CO2 than coal, the main source of power replaced by natural gas. As a result, total auction proceeds for 2010, 2011 and 2012 were $283 million, $175 million, and $168 million, respectfully.[14]

State payments to RGGI, Inc. for program administration amounted to just under $2 million per year between 2010 and 2012.[15] . Due to the decline in auction proceeds, the percentage of auction proceeds used to fund RGGI, Inc. operations rose from 0.70 percent to 1.13 percent. For 2014, state payment obligations were budgeted at $1.7 million or 3.60 percent of the total state payments.

According to the U.S. Energy Information Agency (EIA), the use of coal declined from 23 percent of the RGGI state’s power resource used in 2005 to 9 percent in 2012, while the use of natural gas increased from 25 percent to 44 percent over the same period.[16] Factors that have been attributed to RGGI itself include conservation efforts implemented by the states that were funded by the proceeds of the allowance auctions.

This disparity was reflected in the quarterly auctions for allowances. After an initial period, the demand for allowances fell during the first compliance period, resulting in a drop in price and a situation in which the total number of allowances for which bids were submitted was less than the amount offered during some of the auctions.

2012 Model Rule Change

A program review by RGGI, Inc. in 2012 recommended, among other things, that the cap on CO2 emissions be lowered by 45 percent, to 91 million short tons. This recommendation was incorporated into a revised Model Rule in December 2012 and will take effect starting with the first auction on March 5, 2014. [17]

The most significant change to the Model Rule is the new cap. During 2013, in anticipation of the change, auctions resulted in sales of all allowances offered, with bids double the available allowances. In addition to lowering the cap,

the number of allowances offered is reduced by a percentage of the amount of banked allowances that are held by  regulated entities at the end of the first control period. Banked allowances are allowances bought in prior years, but not yet retired. This adjustment will be made over the 7-year period from 2014 to 2020. A second adjustment will be made for 2012 and 2013 allowances that exceed the total quantity of 2012 and 2013 emissions. This amount will be subtracted from the total cap over the six-year period from 2015 to 2020 after the actual size of the excess is determined.[18]

Other changes include the definition of an interim control period consisting of the first two years of the three-year control period. At the end of this period, sources are required to hold 50 percent of the allowances that they will need to have at the end of the control period. The new rules also eliminate the extension of the control period by one year in case the price allowances exceed a maximum level. Instead, a cost containment reserve of additional allowances will be created, to be released immediately in any auction in which the demand for allowances at prices above a certain cap exceeded the supply of allowances offered for sale in that auction. This cap starts at $4 in 2014 and increases by $2 for the next three years, increasing 2.5 percent thereafter.[19]

Maine and RGGI

The State of Maine provides a portion of RGGI’s operating expenses commensurate with its share of regulated sources. For 2014, state payment obligations were budgeted at $1,651,460, of which Maine’s share is $70,770, or 3.60 percent of the total state payments.[20]

The state of Maine exempts units that supply 10 percent or less of their annual gross generations to the electric grid, and those, which generate more than 50 percent of combustion using fuels other than fossil fuels.[21] Furthermore, offset allowances can be granted for a number of conservation projects, including landfill methane capture and destruction, reduction in emissions of sulfur hexafluoride (SF6), sequestration of carbon due to reforestation, improved forest management or avoided conversion, reduction or avoidance of CO2 emissions from natural gas, oil, or propane end-use combustion due to end-use energy efficiency; and avoided methane emissions from agricultural manure management operations.[22]

According to the U.S. Energy Information Administration, nearly half of the electricity in Maine is provided by renewable sources such as hydroelectric dams and biomass from wood products.[23] RGGI lists six facilities in Maine, which fall under its oversight: Androscoggin Energy, which is owned and operated by Verso Paper, Bucksport Clean Energy, Maine Independence Station, Rumford Power, Westbrook Energy Center and William F. Wyman.[24]

RGGI Chart

The proceeds from the auction of Maine’s share of CO2 allowances are distributed by the Efficiency Maine trust. Quarterly auction revenue amounts are shown in Graph 1 below.[25]  The trust distributes money to various energy efficiency programs including grants for large-scale energy efficiency projects, incentives for homes and businesses to upgrade equipment and appliances with energy-efficient alternatives, and low-income weatherization programs. During the latter part of the first control period, until 2013, not all allowances were sold at the quarterly auctions, and revenue gradually declined. Throughout 2013, all allowances were sold at each auction.

In May of 2011, the Governor of New Jersey, Chris Christie, announced the state’s intention to withdraw from RGGI by the end of the year. In the announcement, he claimed that because of the high cap and low cost of allowances, RGGI had had no effect on CO2 emissions, and that New Jersey’s CO2 emissions had already fallen to less than the target quantity for the year 2020 for other reasons. Governor Christie characterized the initiative as a tax and voiced the concern that if the cap were too stringent, the increase in the cost of electricity would benefit power plants in Pennsylvania, which does not participate in RGGI, at the expense of New Jersey providers.[26]

In light of the new Model Rule, which will impose dramatically lower (and declining) level of emissions permits, the auction prices should increase significantly. As noted above, last year power producers anticipated the tighter restrictions and future cost increases by purchasing all available permits at an average price of $3 per ton, much higher than the previous average price of $2 per ton. This is likely to foreshadow much higher auction price over the next five years, which will be passed on the electricity consumers in the participating states.

RGGI’s Economic Estimates of the New Model Rule

RGGI, Inc. conducted a cost and economic impact analysis of a New Model Rule cap of 91 million tons that went into effect this year. RGGI, Inc. estimates that the auction proceeds of approximately $3.957 billion in the period from 2012 to 2020, or an additional $2.408 billion under the previous rule. RGGI, Inc.’s analysis assumes that the vast majority of the proceeds will be used to fund energy efficiency and renewable energy programs.[27]

RGGI, Inc. also reports the economic impact of energy efficiency investments from auction proceeds and electricity customer co-payments of $2.76 billion produce $15.08 billion from 2013 to 2040. RGGI, Inc. reports $5.5 dollars of savings for each dollar of investment, for an astounding return on investment of 550 percent. The numbers are clearly flawed. RGGI, Inc. reports that the 91 million ton cap will produce an increase of $8.7 billion in GDP, an increase of $7.2 billion in personal income and an increase of 131,900 job years.[28]

The results from RGGI, Inc.’s methodology do not stand up to any reasonable economic analysis. In fact, they are admittedly not based on any kind of formal study. These large positive economic impacts prompt BHI to question aspects of the analysis and the details of the inputs. However, in an email response, a RGGI representative indicated that no formal study existed.[29]

First RGGI, Inc.’s accounting calls into question the robustness of its approach. RGGI, Inc. reports the employment effects in job years instead of jobs, which inflates the employment effects to include temporary jobs. If a worker holds a job for one year, RGGI counts it as one “job year” and if that worker holds a job for the entire 28-year period, RGGI considers it 28 job years. If we divide the 131,900 job years by the 28 reporting years (2012-2040 reported by RGGI), we get 4,711 full time equivalent jobs over the entire period and the entire nine states, or, on average 523 jobs per state. Using Maine’s portion of the projected emissions as a proxy for auction proceeds, we estimate that the employment effect for Maine would be 188 jobs over the entire 28-year period.

If the RGGI, Inc. economic analysis repeated the same double counting of jobs as “job years” in their reporting for increases in GDP and personal income we would find similar reductions. The $8.7 billion increase in GDP reported for the entire period becomes $311 million, or $12.4 million for Maine and $7.2 billion increase in personal income would become $257 million for the RGGI states and $10.3 million for Maine. Finally, the 550 percent investment return rate would become 19.64 percent, which is still a very optimistic rate of investment return.

Did RGGI, Inc. account for the law of diminishing marginal returns in estimating the savings from the energy efficiency investments? The first dollar invested should provide a much larger return on investment than the last dollar invested. With an average investment return of 550 percent, the first invested dollars would have an even much higher return, which seems implausible.

Did the RGGI, Inc. energy efficiency analysis account for the rebound effect or free riders? The rebound effect is a term used to describe the fact that the demand curve for energy consumption is downward sloping. Therefore, energy being a normal good, any reduction in energy prices or bills due to energy efficiency investments will be offset, at least partially, by an increase in the quantity demanded. Free riders are businesses or households that would have made the energy efficiency investment without the subsidy program, but applied for the program to gain the benefits. As Efficiency Maine explains in their Triennial Review, “The baseline is adjusted to account for the share of program participants that might have chosen the efficient measure in the absence of the program, as well as other similar effects.”[30] Again, it is not clear the RGGI, Inc. analysis made such adjustments.    

More problematic is that RGGI, Inc. “projected fossil fuel prices post-2020 were made using the EIA’s AEO [Annual Energy Outlook] 2012 high oil price cases data.”[31] According to the AEO forecast, domestic oil prices will rise to $182.10 per barrel next year from a current price of $101 today, then increase further to $193.48 in 2025 and to $200.36 in 2035, all reported in 2010 dollars. Oddly, RGGI, Inc. did not use the AEO reference case, which projects oil prices rising to $116.91 per barrel next year and $144.98 in 2035.[32]  Obviously, the recent surge in domestic oil production, and surge in natural gas usage, may make the AEO reference case projections too high. Nevertheless, RGGI, Inc.’s use of the high fossil fuel prices is what drives the 550 percent return for energy efficiency investments. This clearly inflates the economic impact of these investments.

The question of net economic impact derives from the use of these funds. In its analysis, RGGI, Inc. contends that $1 added to the electricity production cost produces very little negative economic impact, presumably $1 or less. On the other hand, RGGI projects that the same $1 invested in energy efficiency and renewable energy investments produces $5.5 in net economic benefits. Again, for the reasons stated above, we find this estimate dubious.

BHI Cost and Economic Estimates

The Beacon Hill Institute at Suffolk University (BHI) estimates the cost and benefits if Maine were to follow the New Jersey example and leave RGGI. More specifically, BHI quantifies the cost and impact on the state’s economy. To that end, BHI applied its Maine STAMP® (State Tax Analysis Modeling Program) to estimate the economic effects.[33]

BHI used RGGI, Inc. projections for emissions and auction prices to estimate the auction proceeds that Maine will gain from 2015 to 2020. We include Maine’s portion of the RGGI administrative fees, since these resources will be paid by Maine electricity consumers, but will not be paid to the Maine Efficiency Trust. We also use two auction prices to determine the savings to Maine’s electricity consumers: the RGGI reference case and the allowance price caps under the new model rule. Table 1 displays the cost estimates and economic impact of Maine leaving the RGGI program, compared to a baseline of no policy change.

Table 1:  Auction Proceeds and Economic Estimates of Maine leaving RGGI (2014 $)

Costs Estimates Reference Case High Case
Total cost 2015-2020 ($ million) 106 132
Economic Indicators
Total Employment (jobs) 270 330
Investment ($ million) 5 6
Real Disposable Income ($ million) 10 11

The state’s electricity consumers would save $106 million under the baseline scenario and $132 million under the cost cap scenario. The rather modest cost numbers reflect that fact that only six power plants are affected by RGGI in Maine. Nevertheless, were Maine to leave RGGI, these funds would remain with consumers who would not be charged by power producers that must buy permits from RGGI. However, at the same time Maine would also lose the auction proceeds, which fund energy efficiency and renewable energy programs. 

The STAMP model simulation indicates that Maine’s exit from the RGGI program would produce very modest economic net benefits. A portion of the state’s ratepayers will face slightly lower electricity prices that will reduce their cost of living, which will in turn increase household disposable income. By 2020, the Maine economy will add 270 jobs under the reference case cost scenario and 330 jobs under the high cost scenario.

The reduction in electricity price will increase real incomes as some firms and households spend less of their budget on electricity. In 2020, real disposable income would increase by $10 million to $11 million under the reference and high cost cases, respectively. Furthermore, net investment will fall by $5 million to $6 million.

If we were to apply the RGGI, Inc. analysis “job years” approach to our reference case results, the employment effects would increase to 7,560 “jobs years”, real disposable income years would rise to $308 million and investment years would rise to $140 million.

These net economic benefits of Maine leaving RGGI do not affect all state households and businesses evenly: there are, as always, winners and losers. The gains flow to the owners of the electricity generation plants subject to RGGI, and the costs flow to those businesses and households that contract to provide the energy efficiency and renewable energy services. In essence, the RGGI program transfers resources from a portion of Maine’s economy and to a few very narrow industries within the economy. (Thus, the gains from leaving RGGI are distributed across many and the impact on each individual is small. Whereas the losses are focused on very few, and thus the impact on each individual is large.)

Conclusion

Since 2009, the RGGI program has redirected over $48 million from Maine’s electricity consumers and producers and diverted these funds to energy efficiency renewable energy firms. The adoption of the new Model Rule will triple these funds to $146 million to $183 million over the next five years. These transfers distort the energy market in favor of more inefficient uses of the funds.

Were Maine to withdraw from the RGGI program, the market distortions would decrease and produce a small boost to economic activity. However, the gains would be spread across a great many electricity consumers, which individually would feel little change, while the costs would be felt by very small portion of firms and households.

The RGGI program has and will continue to generate economic benefits for a small group of favored industries.

APPENDIX

Modeling a Maine exit from RGGI using STAMP

To simulate the exit of Maine from the RGGI program, we need to calculate the amount of auction revenue that affected power plants would no longer need to buy for the period 2015-2020. We utilize the projections of emissions and auction prices data from RGGI’s 2012 Program Review Final Modeling Analysis.[34] Specifically, we use the emissions and price data from the 2013 IPM Modeling results from the spreadsheets labeled “emissions” and “allowance prices” in the Excel workbook RGGI Results_91_Cap_Bank_MR.[35]  We adjusted the Maine emissions budget down to reflect the initial 91 million ton cap for 2014 and the banked allowances from the first control period (296,000 tons per year) using the “2014 CO2 Allowance Allocation,” or 2.817 million tons.[36]

Next, we estimate the banked allowances from the second control period: 2012 and 2013. Using the 2012 and 2013 CO2 Allowance Allocation to estimate that affected power plants have 2.107 million banked allowances from the second control period, which divided by 6 years (2015 – 2020) results in an additional annual budget adjustment of 351,000 tones. We subtract this amount from our estimated 2015 budget of 2.907 million to obtain our 2015 adjusted budget of 2.556 million tons. The for the CO2 allocation budgets for 2016 through 2020, we simply subtracted 2.5 percent from the previous year’s budget.

We calculated the Maine’s auction proceeds by multiplying the CO2 allocation budget for each year by the allowance prices for each year listed in the RGGI Results_91_Cap_Bank_MR. For years 2017 and 2019, we used the midpoint of the adjacent year prices; we calculated the 2017 price as the midpoint between 2016 and 2018.

We simulated these changes in the Maine STAMP model as an increase in revenue for the state sales tax on the utility sector. The funds were redirected to the utility, construction and Professional, Scientific, and Technical Services sectors. The model provides estimates of the proposals’ impact on employment, wages and income. Each estimate represents the change that would take place in the indicated variable against a “baseline” assumption of the value that variable for a specified year in the absence of the policy of Maine leaving RGGI.

Because the RPS requires Maine households and firms to use more expensive “green” power than they otherwise would have under a baseline scenario, the cost of goods and services will increase under the RPS. These costs would typically manifest through higher utility bills for all sectors of the economy. For this reason, we selected the sales tax as the most fitting way to assess the impact of the RPS. Standard economic theory shows that a price increase of a good or service leads to a decrease in overall consumption, and consequently a decrease in the production of that good or service. As producer output falls, the decrease in production results in a lower demand for capital and labor.

BHI utilized its STAMP (State Tax Analysis Modeling Program) model to identify the economic effects and understand how they operate through a state’s economy. STAMP is a five-year dynamic CGE (computable general equilibrium) model that has been programmed to simulate changes in taxes, costs (general and sector-specific) and other economic inputs. As such, it provides a mathematical description of the economic relationships among producers, households, governments and the rest of the world. It is general in the sense that it takes all the important markets, such as the capital and labor markets, and flows into account. It is an equilibrium model because it assumes that demand equals supply in every market (goods and services, labor and capital). This equilibrium is achieved by allowing prices to adjust within the model. It is computable because it can be used to generate numeric solutions to concrete policy and tax changes.[37]

About the Authors

David G. Tuerck is executive director of the Beacon Hill Institute for Public Policy Research at Suffolk University, where he also serves as chairman and professor of economics. He holds a Ph.D. in economics from the University of Virginia and has written extensively on issues of taxation and public economics.

Paul Bachman is director of research at BHI. He manages the institute’s research projects, including the development and deployment of the STAMP model. Mr. Bachman has authored research papers on state and national tax policy, state labor policy. He also produces the institute’s state revenue forecasts for the Massachusetts legislature. He holds a Master Science in International Economics from Suffolk University.

Cristina Crawford is a research assistant at BHI. She is a Master of Science in Economics candidate at Suffolk University.

The authors would like to thank Frank Conte, BHI Director of Communications, and Mark Olivera, spring 2014 Intern from the University of Massachusetts-Boston for their editorial assistance.

Click here to download the study.

Notes and sources


[1] Regional Greenhouse Gas Initiative, “RGGI, Inc.,” accessed February 13, 2014, http://www.rggi.org/rggi.

[2] U.S. Environmental Protection Agency, “Acid Rain Program,” accessed February 11, 2014, http://www.epa.gov/airmarkets/progsregs/arp/basic.html.

[3] Zachary Coile, “’Cap-and-trade’ model eyed for cutting greenhouse gases,” San Francisco Chronicle, (December 3, 2007) http://www.sfgate.com/green/article/Cap-and-trade-model-eyed-for-cutting-greenhouse-3300270.php.

[4] RGGI Inc., “Program Design,” http://www.rggi.org/design.

[5] RGGI Inc., “Board of Directors,” accessed February 13, 2014, http://www.rggi.org/rggi/board.

[7] RGGI Inc., “The RGGI CO2 Cap,”, http://www.rggi.org/design/overview/cap.

[8] RGGI Inc., “Regional Greenhouse Gas Initiative Model Rule, 12/31/08 final with corrections,” accessed February 13, 2014, http://www.rggi.org/docs/Model%20Rule%20Revised%2012.31.08.pdf.

[9] Model Rule, 21.

[10] Ibid.

[11] Ibid, 17.

[12] RGGI Inc.,  “Regulated Sources,” accessed February 20, 2014, http://www.rggi.org/design/overview/regulated_sources.

[13] RGGI, Inc., “CO2 Auctions, Tracking & Offsets,” accessed February 13, 2014, http://www.rggi.org/market.

[14] RGGI Inc., “Allowances Offered and Sold,” accessed February 20, 2014, http://www.rggi.org/market/co2_auctions/results.

[15] $1,981,539, $1,820,393 and $1,900,514, respectively. Source: RGGI, 2011 and 2012 Year-End Audited Financial Statements, accessed February 20, 2014, http://www.rggi.org/docs/2011_Year-End_Audited_Financial_Statement.pdf and http://www.rggi.org/docs/2012_Year-End_Audited_Financial_Statement.pdf.

[16] Mike Leff, “Lower Emissions Cap for Regional Greenhouse Gas Initiative Takes Effect in 2014,” February 3, 2014, http://www.eia.gov/todayinenergy/detail.cfm?id=14851#.

[17] RGGI Inc., “Summary of RGGI Model Rule Changes: February 2013,” accessed February 13, 2014, http://www.rggi.org/docs/ProgramReview/_FinalProgramReviewMaterials/Model_Rule_Summary.pdf.

[18] RGGI Inc., “Model Rule,” op. cit.

[19] Ibid.

[20] RGGI Inc., “Annual Meeting of the Board of Directors, Thursday, October 17, 2013,” accessed February 20, 2014, http://www.rggi.org/docs/Board/2013-10-17/RGGI_Inc_BOD_Materials_Oct_2013_Updated.pdf.

[21] Maine Revised Statutes, Title 38, Chapter 3-B: Regional Greenhouse Gas Initiative accessed February 20, 2014, http://www.mainelegislature.org/legis/statutes/38/title38sec580-B.html.

[22] State of Maine, Department of Environmental Protection, “Chapter 156:  CO2 Budget Trading Program,” www.maine.gov/sos/cec/rules/06/096/096c156.doc.

[23] U.S. Energy Information Administration, “Maine Profile Analysis,” (December 18, 2013) http://www.eia.gov/state/analysis.cfm?sid=ME.

[26] Governor Chris Christie, “New Jersey’s Future Is Green,” (May 5, 2011), http://www.nj.gov/governor/news/news/552011/approved/20110526a.html.

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[27] REMI Economic Impact Analysis, “91 Cap Bank Model Rule Case,” (June 3, 2013),  http://www.rggi.org/docs/ProgramReview/REMI%2091%20Cap%20Bank%20MR_2013_06_03.pdf

[28] Ibid.

[29] Email correspondence from RGGI to BHI dated February 20, 2014. Available upon request.

[30] Efficiency Maine Trust, Optimal Energy Inc. and Dunsky Energy Consulting, Triennial Review (April 2010) http://www.efficiencymaine.com/docs/EMT_Final_Tri_Plan-1.pdf.

[31] REMI Impact Analysis, 14.

[32] U.S. Department of Energy, Energy Information Administration, Annual Energy Outlook 2012, with Projections to 2035, DOE/EIA-0383 http://www.eia.gov/forecasts/aeo/pdf/0383(2012).pdf, (June 2012): 183.

[33] Detailed information about the STAMP® model can be found at

http://www.beaconhill.org/STAMP_Web_Brochure/STAMP_HowSTAMPworks.html.

[34] Regional Greenhouse Gas Initiative, Inc., 2012 Program Review, (February 2013), http://www.rggi.org/design/program-review

[35] Needed

[36] Regional Greenhouse Gas Initiative, Inc., “Allowance Allocation,” (January 13, 2014), http://www.rggi.org/market/tracking/allowance-allocation

[37] For a clear introduction to CGE tax models, see John B. Shoven and John Whalley, “Applied General-Equilibrium Models of Taxation and International Trade:  An Introduction and Survey,” Journal of Economic Literature 22 (September 1984): 1008. Shoven and Whalley have also written a useful book on the practice of CGE modeling entitled Applying General Equilibrium (Cambridge:  Cambridge University Press, 1992).

 

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Expanding Medicaid will Hurt Maine’s Families with Lower Incomes and Fewer Jobs http://mainepolicy.org/expanding-medicaid-will-hurt-maines-families-with-lower-incomes-and-fewer-jobs/ http://mainepolicy.org/expanding-medicaid-will-hurt-maines-families-with-lower-incomes-and-fewer-jobs/#comments Thu, 20 Feb 2014 16:09:14 +0000 http://www.mainepolicy.org/?p=3265 Continue Reading →]]> Many of Maine’s policymakers have already fallen for the siren call of Medicaid expansion as provided for under the provisions of the Affordable Care Act (Obamacare). At first glance, expanding Maine’s Medicaid program looks like free money since Uncle Sam has promised to pick up the entire tab for the first three years. Who doesn’t like free money?

In reality, nothing is free. Maine has already been growing increasingly dependent on Medicaid and paying a steep economic price as public sector spending crowds out the private sector (see Methodology section for details). As shown in Chart 1, Maine’s private sector has significantly declined by 28.8 percent to only 65.8 percent in 2012 from 92.4 percent in 1929. Consequently, Maine now has the 11th smallest private sector in the county (see Table 1).

MHPC Chart 1 Projected Private Sector under Medicaid Expansion

Obamacare’s expansion of Medicaid will come at the expense of long-run economic growth by further shrinking Maine’s anemic private sector. A smaller private sector results from two negative impacts of Medicaid expansion. First, it will have to be paid for by higher taxes or borrowing (albeit at the federal level for the time being), leaving less money in the pockets of individuals and businesses and reducing their ability to invest for the future. Second, it will crowd-out the private sector in competition for scarce labor and capital.

MHPC Table 1 Private Sector Share of Personal Income

According to estimates from the Alexander report, the expansion of Medicaid will boost spending by $575 million in its first year. [i]  If this occurred in 2012, that additional public spending would have reduced the private sector by up to 0.83 percentage points. More troubling, as shown in Chart 1, Medicaid expansion would reverse the growth in the private sector following the “Great Recession” and force it on a downward trajectory.

Maine’s policymakers should be very concerned about this “crowding out” of the private sector by government spending because Chart 2 reveals a significant correlation between the size of a the private sector and household income. As a consequence of Obamacare’s expansion of Medicaid, Maine’s taxpayers will pay a steep economic price with lower incomes and fewer jobs.

MHPC Table 2 Estimated Economic Loss Due to Medicaid Expansion

Table 2 shows the negative economic impact of Obamacare’s expansion of Medicaid on the average Maine household. Overall, Maine’s long-run economic growth will suffer a drop in personal income of $1.5 billion. This drop in personal income can manifest itself in one of two ways—lower household income for everyone or fewer jobs, though reality will lie somewhere in-between. The economic costs range from:

  • $2,638 less personal income for all households with no private sector job loss; or,
  • No change in personal income but the loss of 30,988 private sector jobs.

Table 1 and Chart 2 show how Maine’s private sector would lose ground relative to the other states. Maine’s ranking would fall from the 11th smallest private sector in the country to the 9th smallest. Only 5.1 percentage points separates Maine from lowly West Virginia (59.9 percent) while 11.7 percentage points separate Maine from number 1 ranked, and next-door neighbor, New Hampshire (76.7 percent).

MHPC Chart 2 Relationship Between Private Sector and Per Household Income

In conclusion, Obamacare’s expansion of Medicaid is not “free” as there will be economically devastating repercussions to the long-term health of Maine’s economy. Clearly, the better option is to shelve Medicaid expansion and reduce government spending, which in turn would expand the private sector.  The private sector could then get back to work increasing incomes and creating new jobs.

Methodology

Personal income comes from two sources: the private sector and the public sector. The distinction between the two sectors is important because only the private sector creates new income. The public sector, in contrast, can only redistribute income through taxes and spending. More specifically, public sector spending consists of personal current transfer receipts (Medicare, Medicaid, Social Security, etc.) and government employee compensation (federal, state and local).

The economic loss estimates in this study are derived from the significant positive correlation between per household personal income with the private sector share of personal income for 2012 as shown in Chart 2. Put simply, the bigger the private sector then the greater per household personal income. When examining the 48 contiguous states, the analysis finds that, on average, a one percentage point decrease in the size of the private sector yields a decrease in per household income of approximately $3,176.

Obamacare’s expansion of Maine’s Medicaid system by $575 million would significantly change the composition of Maine’s personal income toward public sector spending and shrink the private sector by up to 0.83 percentage points. That means, in the next few years, the average household in Maine would see their income drop by up to $2,638 or the number of jobs reduced by 30,988. The overall loss in personal income would be up to $1.491 billion ($2,638 multiplied by 565,063 households).

This analysis estimates a reduction in the long-term growth in the economy and does not necessarily mean the elimination of existing household income or jobs. It does mean that future income increases and job creation will be lower than they would be in the absence of higher taxes and spending.  Furthermore, this analysis underestimates the long-term decline in the private sector that will occur because of a slower private sector growth rate.

Download the report here.

Study 20140220

Notes and Sources


[i] The Alexander Group, “Feasibility of Medicaid Expansion under the Affordable Care Act: A Review Submitted to the Maine Department of Health and Human Services,” January 10, 2014, p. 58. http://maine.gov/dhhs/Alexander/Maine%20Medicaid%20Expansion%20Report.pdf

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The Free ME Initiative http://mainepolicy.org/the-free-me-initiative/ http://mainepolicy.org/the-free-me-initiative/#comments Tue, 22 Oct 2013 16:06:05 +0000 http://www.mainepolicy.org/?p=3109 Continue Reading →]]> Free ME is a bold initiative that will free Maine. It is a realistic strategy for spurring economic development statewide.

Maine has the opportunity to become America’s premier destination for economic freedom and growth. Overall, Free ME is not a new concept. Free ME simply expands on the bipartisan idea embodied in the Pine Tree Development Zones, which will exponentially increase the positive economic impact in the economically hardest hit areas of Maine.

The Free ME initiative will help put Maine back on the path to prosperity. Just think what it would mean for Maine to become the “tax haven” of the northeast, where entrepreneurs can thrive, where retirees can enjoy more of what they have saved, where families can keep more of what they have earned.

Free ME will turbo-charge the state’s economy and make Maine a destination for capital and investment. The economic growth and prosperity that follow will more than make up for the “lost” revenue to government. Free ME is a revolutionary idea that will make Maine more competitive and more business-friendly. Free ME will stop the bleeding and jump-start the economic recovery that is so urgently needed.

With more job creation, prosperity and opportunity, Free ME has the ability to decrease government dependence, which sadly has reached epidemic proportions in our state. More than one out of every three Mainers is dependent on the welfare system, and those numbers will only continue to climb unless we act now to turn things around.

If adopted, Free ME will keep the flame of freedom burning brightly for generations to come and FREE MAINE.

Learn more: www.FreeME.us
Follow Free ME on Facebook: www.facebook.com/FreeME.us

Download the full Free ME report here.

FreeME cover

]]> http://mainepolicy.org/the-free-me-initiative/feed/ 1 Online Learning: Maximizing Results by Leveraging Technology http://mainepolicy.org/online-learning-maximizing-results-by-leveraging-technology/ http://mainepolicy.org/online-learning-maximizing-results-by-leveraging-technology/#comments Fri, 15 Mar 2013 16:39:13 +0000 http://www.mainepolicy.org/?p=2591 Continue Reading →]]> It’s time for Maine to embrace innovation in education through online learning – a method inherently customized to suit the needs of our individual students. Think about the technological progress we’ve made in different areas of life over the past few centuries. At one time, surgeons knew only large incisions and operated tirelessly, often experimentally, in hopes of saving their patients’ lives. Now, surgeons are successfully performing laparoscopic surgery and sending their patients home the following day, often even the same day. Telephones, which used to be affixed to the wall or a booth, migrated to your office desk to your car to your pocket! All the while our American education system has remained relatively the same – a teacher in a classroom with a chalkboard and her students in their chairs fixed neatly facing her, pencils and paper in hand.

boy bored in class Third grader Mason wants to be an astronaut when he grows up. He’s really   motivated and by 10:00 a.m. he’s finished all three of his math worksheets and Mrs. Sucy resorts to giving him busy work while she finishes coaching his fellow classmates through their work. Third grader Sophia, however, is still stuck on math problem number one. She’s too embarrassed to ask Mrs. Sucy to slow down and repeat the lesson again.

girl stuck on problem in class Mrs. Sucy is a terrific teacher and she recognizes her students each learn in different ways – some by doing, some audibly, some visually. However, there’s just not enough time in a day to fully meet each of her students varying needs. Mrs. Sucy’s 25 students are akin to train cars all on the same track, all forced to go the same speed, run by one engine.  If she as the engine slows the train down, Mason will be altogether bored and break away. If she speeds up to accommodate Mason, she’ll certainly lose students, and most definitely blast Sophia beyond her speed!

Technology is the key to revolutionizing education for all kids around the world.  The term “online learning” embraces this very concept.

(Download the full report here)

What is online learning?

Online learning, often referred to as “anywhere, any time learning,” is an education model whereby a student completes his coursework through internet-based programs. Of course this model can take many different shapes. It is possible for a student to enroll in a full-time online learning program which is comprehensive of the entire subject matter for his grade level. Or, a student may take just one or a handful of courses online while he is enrolled in a traditional brick and mortar school.

Most popular models of online learning

Full Time:

Students enrolled in full time online learning perhaps have the most flexibility in their education. Rather than a traditional brick and mortar school setting, students “log on” to school with the click of a button on their computer from anywhere with internet …  a home desktop, an airplane, a hospital bed, a hotel room, the list is endless.

Examples: K12, Inc. and Connections Academy – Both are widely popular across the U.S. and each were to be online learning providers for the two proposed virtual charter schools in Maine. Last year, the two proposed virtual charter schools were recommended by the Maine Charter School Commission to resubmit their applications in the next reviewing cycle and they did so in January of 2013. The Commission denied both applications and has not yet approved a virtual charter school in Maine.

Although Maine’s charter school law does allow provisions for a full time virtual charter school, use of this full time virtual school model currently exists in Maine only in a home school situation where parents pay for it out of pocket (in addition to their taxes which in part fund the local public school system).

Blended:

Students’ time is divided between online learning and teacher-led, hands on workshops where there is engaging discussion and activities which complement the individual learning taking place through the online programs. Traditional desks are replaced by mini cubicles containing personal computers. Students are with their fellow classmates in a brick and mortar school and are supervised by teachers. Students take the same online courses but may progress at each of their individual paces.

So for example, Mason and Sophia are taking the same third grade math curriculum. Mason is completing his long division unit after watching the virtual lesson on his computer earlier this morning; he looks forward to moving on to fractions next week! Sophia is feeling confident in her division skills as she was able to hit “pause” during the virtual lesson, while she takes some extra notes. She proceeds to start her exercises and realizes she forgets her first step. She goes back to the virtual lesson and clicks “repeat.” Meanwhile, Mrs. Sucy who has the ability to mill around the room and monitor the progress of her students as individuals, has her own computer and receives a red flag notification on her monitor indicating Sophia may need some encouragement or a bit of an explanation.

Examples: Carpe Diem Collegiate High School and Middle School in Yuma, Arizona

Carpe Diem’s expenditures per student are $4,000 less than the national average. [1]

This model, in its purest form, does not yet exist in Maine. However, with state surplus funds, the Maine Learning Technology Initiative, launched in 2001 by the Maine Department of Education and Apple, Inc., issued laptops to all middle school students and teachers. Through negotiations with Apple, Inc. in 2009, the MLTI expanded and supplied new laptops to all of Maine’s public high school students.[2] Given this laptop program and the widespread support of superintendents throughout the state, Maine has a nearly perfect foundation to implement the blended model of online learning.

Supplemental:

A student may enroll in an online class or two, in addition to his traditional education, for various reasons. Some students, especially those who live in rural areas, would not otherwise have opportunities to learn Mandarin Chinese or take an Advanced Placement course in preparation for college. Others need to catch up on a particular subject over the course of the summer; perhaps they were sick for an extended period of time or just simply succeeded in all but one subject.  Those who don’t like to get their hands dirty, can even virtually dissect a frog in an online biology class!

Examples: PLATO Learning, Inc. and Virtual Learning Academy (with either of these providers, students may enroll in one or two courses or full time)

This model does exist in Maine. Founded in January 2012, the Maine Virtual Learning Consortium which was established by the Maine International Center for Digital Learning and RSU 19, offers eight courses including Latin, Anatomy and Physiology, and Art History. Schools which choose to participate are called “Partner Schools;” they pay an annual enrollment fee and must contribute two one-semester online courses to be distributed for use throughout the other Consortium Partner Schools.  [3]

Who provides online learning?

Just in the past year, the number of Maine state-approved online learning providers has increased from three to seven. These private providers, approved for use in the public school classrooms, are:  Advanced Academics, Apex Learning, Connections Academy, K12, Inc., Lincoln National Academy, PLATO Learning, Inc., and Virtual Learning Academy.

Elluminate

Elluminate Live! Session

Teachers

Online learning teachers interact with their students through e-mail, electronic real time white boards, instant messaging, blogs, forums, phone, chat rooms, and more! The screenshots below give you an idea of the face to face class time and accountability that can take place even through cyberspace. Students interact and respond to questions through use of the chat box, private messaging, and through a microphone when called upon by their teacher. Teachers can use the whiteboard to type instructions, draw shapes and even graph mathematical equations. Class may meet once a week or multiple times per week. Extra tutoring can take place between the teacher and students as needed on their own time. Homework can be submitted via e-mail or posted on a forum with indications of whether or not students have met the set deadline.

Tutor trove demo

Tutor Trove Lesson

Conclusion

Online learning embodies the greatest qualities of customized learning. Through online learning, classmates like Mason and Sophia can progress in courses at their own pace, according to their strengths and weaknesses in different subjects. Teachers like Mrs. Sucy, who tirelessly strive to meet the needs and interests of each of her students, can devote more time to tracking and encouraging the progress of her students as unique individuals. Online learning empowers her as just one teacher to have several “engines” running, with students each on their own tracks – slowing down, breaking, and accelerating according to their abilities. The bottom line is leveraging technology maximizes results. Given the laptop programs and online learning programs already in place throughout our state, Maine has the potential to revolutionize education to such a degree that every student can realize his full potential.


Notes and Sources

[1] Diana Moore and Oliver Leonard, iLearn Project, Freedom Foundation, 2011.

[2] Maine Learning Technology Initiative, “About MLTI,” Maine Department of Education. http://maine.gov/mlti/about/index.shtml

[3] Maine Virtual Learning Consortium, “Membership and Costs.” https://sites.google.com/a/mevlc.org/membership 

 

Amanda Clark is the Education Policy Analyst at The Maine Heritage Policy Center. She may be reached at aclark@mainepolicy.org

Great Schools for ME is a series of publications by The Maine Heritage Policy Center which focus on improving Maine’s education system through customized learning opportunities for all Maine students. All information is from sources considered reliable, but may be subject to inaccuracies, omissions, and modifications.

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Crisis to Cure: Maine’s Health Care Reform Law is Helping Business http://mainepolicy.org/crisis-to-cure-maines-health-care-reform-law-is-helping-business/ http://mainepolicy.org/crisis-to-cure-maines-health-care-reform-law-is-helping-business/#comments Wed, 27 Feb 2013 15:13:16 +0000 http://www.mainepolicy.org/?p=2563 Continue Reading →]]> Opponents of Maine’s new health care reform law (PL90) erroneously describe the law as “a gift to the insurance companies.”[1]  In reality that gift has come in the form of more stable markets spurring investment and opportunities for insurers to compete for market share.  Therefore, the real winners are the Maine small businesses and consumers who enjoy more choices and lower priced health insurance options.

(Download the study here)

This study looks beyond the regulations to highlight the practical impact PL90 is having for end users, the businesses and consumers who purchase private health insurance in Maine.  This is a measure all too often dismissed by critics yet perhaps the only measure that truly matters.  The following case studies illustrate the effects of specific provisions of PL90.  Names have been altered for confidentiality purposes, but the profiles are of real companies and individuals. All material details presented in the case studies are accurately portrayed.

PL90 is demonstrating who truly benefits when we free our markets to respond to consumer needs, the many individuals and small businesses in Maine who rely on private health insurance—a 56 year old woman with a newly transplanted heart able to afford her anti-rejection medications, a small business lowering their cost rather than accepting a 23 percent rate increase, and another small business able to continue providing health insurance to its employees without having to ask them for a premium contribution.

 

Case Study 1: Improved Individual Market

Background:

PL90 contained numerous provisions aimed at improving Maine’s individual and small group health insurance markets.  The Maine Guarantee Access Reinsurance Association (MGARA) was created to subsidize high cost claimants in the individual health insurance market.[2]  MGARA assesses $4 per month from policyholders across all insurance markets in Maine raising approximately $25 million.  This fund is supplemented with premiums paid by insurers who have high cost individuals in the reinsurance pool.

Once an individual is designated to the reinsurance pool, MGARA reimburses the insurer after the first $7,500 of claims paid, 90 percent of the next $25,000 of claims paid, and 100 percent of claims paid in excess of $32,500.

MGARA is transparent to policyholders who are unaffected by the program in terms of their coverage and premium cost.  In most cases, policyholders are likely unaware that they are in the reinsurance pool.  Their plan choices are the same as any other policyholder and their premiums are the same as a healthy individual of the same age and gender.

Profile:

Jane Doe, a 56 year old single woman, worked for a small Maine employer who offered a group health insurance plan covering Jane and four additional employees.  In the fall of 2011, Jane suffered a massive heart attack.  The attack resulted in significant irreparable tissue damage and left Jane in and out of consciousness for months in an intensive care unit first in Maine and then a hospital in Boston.

She was eventually released after months of hospitalization with a pump surgically implanted in her chest that circulated her blood while she waited on the heart transplant list.  Jane overcame many odds simply by surviving, but she would not be returning to work.

During this timeframe Jane applied for and was approved for social security disability.   She must now wait two years before she can apply for Medicare.  Her employer generously maintained her group insurance coverage for the maximum timeframe allowed under the group insurer’s eligibility rules.  Because this is a small employer ineligible under the Consolidated Omnibus Budget Reconciliation Act (COBRA), Jane found herself needing to seek coverage in the individual insurance market.

Effect of PL90:

Jane’s biggest challenge in affording individual health insurance was out-of-pocket costs.  She had sufficient savings to cover her monthly premium cost but worried about the plans additional out-of-pocket expenses.  Many plans have deductibles and out of pocket limits in the thousands and occasionally in excess of $10,000 annually.

Jane was able, however, to purchase a new individual product offered by Anthem, compatible with a Health Savings Account (HSA), that limited her annual out-of-pocket exposure to $2,600.[3]  It has been years since Anthem, Maine’s largest individual major medical insurance provider, has introduced new products.  The individual market has been steadily deteriorating, raising alarms the market could collapse entirely.  The Maine Bureau of Insurance issued a white paper detailing this problem in 2000 which was updated in 2001.[4]

MGARA has breathed new life into the individual health insurance market.  A viable market attracts investment as has been demonstrated by Anthem who introduced this new HSA product in addition to a portfolio of new products Anthem refers to as “HealthChoice Plus”[5] with premiums as much as 72% lower than products previously available.[6]  Since MGARA became operational in July of 2012, Anthem saw new products sales increase approximately 60 percent over the same timeframe in 2011.[7]

PL90 created a more stable individual health insurance market.  The result was new investment by a Maine insurer that provided invaluable coverage for an individual in need.

 

Case Study 2: Substitution Effect

Background:

The small group health insurance market in Maine includes several insurers who compete for market share.  Because of this, it is typical for small companies to shop their insurance coverage each year to make sure they are getting the best price.  As an insurance broker, I can tell you that small companies change insurers and products frequently, sometimes literally on an annual basis.

PL90 not only instituted MGARA and changes to insurance rating rules, it also removed barriers to new products and investment.  One provision lifted a somewhat obscure Maine law that prohibited individual Health Maintenance Organization (HMO) deductibles in excess of $1,000.  As a result, multiple insurers offered new small group HMO products including Maine’s non-profit health insurer, Harvard Pilgrim Health Care.[8]

Profile:

ABC Architecture is a small firm in southern Maine with a dozen employees.  They offer health insurance to their staff of which ten participate.  Their plan renews each year on January 1st.  This year they faced a 23 percent rate increase from their insurer which translated to a premium increase of over $8,300.

Effect of PL90:

HC T1 CompressedAs shown in Table 1, instead of a 23 percent rate increase, ABC Architecture experienced an 11 percent rate decrease saving the company over $4,000 over 2012, and over $12,000 compared to their premium cost had they renewed with their existing health insurance plan. ABC Architecture shopped as they do each year and changed to one of Harvard Pilgrim’s new HMO products.  The coverage was almost identical with only a $50 increase in their employee’s annual out-of-pocket exposure.  This was a Health Savings Account (HSA) compatible plan like their previous plan, but it included an enhanced prescription benefit.

The chart below, prepared by the Maine Bureau of Insurance, shows a growing trend of health insurance rate decreases rising from less than 3 percent before PL90 to 9.4 percent in 2011 and 17.5 percent in 2012.[9]  The percentage of small businesses experiencing increases dropped in every category and the substitution effect tells us that many more companies changed products or insurers to further mitigate costs.The substitution effect of companies changing insurance plans is an important aspect of the small group health insurance market.  It demonstrates that many companies change plans and insurers to avoid or mitigate rate increases.  Given that fact, when you see data regarding rate decreases, the numbers are invariably understated.

HC Graph 1

Case Study 3: Innovation

Background:

One PL90 provision enabled the formation of a health insurance captive which allows companies to band together to manage their health insurance expenses.  One group in Maine, the Maine Wellness Association, took advantage of this provision and formed a health insurance captive called MaineSense.[10]

MaineSense provides a new option for Maine companies with a number of unique features such as employer ownership in the program.

Profile:

XYZ Builders is a commercial building contractor in central Maine.  The company has provided health insurance to its 20 employees for many years.  They still pay 100 percent of the employee premium though rate increases are threatening their ability to continue doing so.

Effect of PL90:

Concerned about historical health insurance rate increases and interested in the opportunity to participate in what they viewed as an innovative new program, XYZ Builders joined MaineSense in January of 2012.  Doing so the company held their cost level with 2012 while improving their coverage.HC T2 Compressed

PL90 created the opportunity for the Maine Wellness Association to launch a new program.  That new program translated to a choice for XYZ Builders that did not otherwise exist.  Not only did XYZ Builders enjoy participation in an innovative program of which they are now a part owner, they have experienced two years of equal or lower health insurance costs, an uncommon experience for a Maine small business.The employee single plan out-of-pocket limit fell from $3,500 excluding prescription out of pocket costs to $2,550 including prescription out of pocket costs.  January first of 2013, XYZ Builders renewed their plan unchanged with MaineSense at a 1% premium decrease.

Conclusion:

Creating viable, competitive health insurance markets should not be viewed as a “gift to insurance companies,” but instead should be recognized for what they truly are—a gift to the consumers who purchase through those markets.

When we focus on policies that stabilize our insurance markets, we see rates begin to stabilize, investment in new products, heightened competition, and innovative market entrants.  We also see a 56 year old woman with a newly transplanted heart able to afford her anti-rejection medications.  We see a small business lowering their cost rather than accepting a 23 percent rate increase.  We see another small business able to continue providing health insurance to its employees without having to ask them for a premium contribution.

PL90 is demonstrating who truly benefits when we free our markets to respond to consumer needs, the many individuals and small businesses in Maine who rely on private health insurance.

 

Notes and Sources


[1] For more information on Maine’s Healthcare Reform Law (PL 90), see: http://www.maine.gov/pfr/insurance/PL90/indexpl90.html

[2] For more information on the Maine Guarantee Access Reinsurance Association, see: http://mgara.org/

[4] The Maine Bureau of Insurance, “Maine’s Individual Health Insurance Market,” January 11, 2000. http://www.anthem.com/health-insurance/home/overview

[10] https://www.mainesense.org/

 

Joel Allumbaugh is the Director of the Center for Health Reform Initiatives at The Maine Heritage Policy Center.  He may be reached at JAllumbaugh@mainepolicy.org.  

Crisis to Cure is a series of publications by The Center for Health Reform Initiatives which focus on patient-centered reforms to America’s health care system that will keep personal medical decisions between patients and their physicians – without government interference and intrusion.  All information is from sources considered reliable, but may be subject to inaccuracies, omissions, and modifications.

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The Past and Present of Customized Learning in Maine http://mainepolicy.org/the-past-and-present-of-customized-learning-in-maine/ http://mainepolicy.org/the-past-and-present-of-customized-learning-in-maine/#comments Wed, 16 Jan 2013 12:30:52 +0000 http://www.mainepolicy.org/?p=2492 Continue Reading →]]>  Maine’s first academy, Berwick Academy in South Berwick, was founded in 1791.

This is the first of a three-part series on customized learning in Maine. Download the report here.

Customized learning is a student-focused system where kids enroll in the curriculum which best meets their educational needs.  Customized learning is not new and, in fact, is at the heart of Maine’s well-rooted educational history going back to the days of town academies.  Unfortunately, this individualized method of education never fully flourished to its full potential where every Maine child could thrive in a customized learning environment.

More than ever, Maine needs creative solutions for today’s kids.  Maine now faces a “Demographic Winter” where the shrinking number of children threatens the very sustainability of the current population level and economy.  As a consequence, falling student enrollments will mean fewer educational opportunities for today’s children.  Yet, specialized career interests, Gifted and Talented programs, apprenticeship opportunities, foreign language courses and more are all what make individual schools unique—almost as unique as the individual needs of our children.

For the sake of our kids and for the sake of Maine’s future, customized learning is the best way to grow our students and our economy.   Already a few tentative steps have been taken toward building a greater customized learning environment with the recent introduction of charter schools and online learning.  More still needs to be done.

This is the first study of a three-part series examining customized learning in Maine.

The second study will highlight successful examples of customized learning in Maine.  The third study will lay out a policy roadmap to customized learning for all Maine children.

Early Customized Learning: Town Tuitioning

Throughout the late 1700s and the 1800s, many private insitutions of learning, known as Maine’s town academies or independent schools, sprouted with various purposes concerned with the needs of children.  Some schools were founded on religious grounds, some offered comprehensive boarding programs, and even one, the Carrabassett Valley Academy, originated as a tutoring establishment for those training in the arts of winter sports on Sugarloaf Mountain.

Berwick Academy was Maine’s first academy, founded in 1791, nearly thirty years before Maine became a state.  The people of Berwick, York, Kittery, Rollinsford, Portsmouth and Wells got together and financed the founding of Berwick Academy, to educate the “deplorable youth in this part of the country.” To give you an idea of Berwick Academy’s historical timeline, recall that also in 1791, the United States Bill of Rights was passed, King Louis XVI swore an oath as a “constitutional king” during the French Revolution, and Congress created the United States Mint.

The other 11 academies which continue to serve Maine’s students today are:

  • Carrabassett Valley Academy (1982)
  • Erskine Academy (1883)
  • Foxcroft Academy (1823)
  • Fryeburg Academy (1792)
  • George Stevens Academy (1803)
  • Gould Academy (1835)
  • Hebron Academy (1804)
  • Lee Academy (1845)
  • Lincoln Academy (1801)
  • North Yarmouth Academy (1814)
  • Thornton Academy (1811)
  • Washington Academy (1792)

Following an 1873 law which provided for the receipt of state aid by public schools, Maine’s legislature mandated in 1903 the local towns’ responsibility for the education of their respective residing school-aged kids.  Even with state aid, many of the towns, especially those in rural Maine, could not afford to build a local high school.  The solution in these situations was the ability for the child’s town of residence to send a “tuition” payment with each child to the public or private, religious or non-religious school of his choice.  Of course, many of the private schools at that time happened to be town academies.  Although many of the academies initially did have religious grounding and affiliations, over time, they secularized their missions.  Since 1980, due to a ruling by Maine’s highest court, religious schools may no longer obtain public funds.

Current Customized Learning: Traditional Public, Private, Charter, Online

Today, Maine’s tuitioning system continues. Towns without local public high schools have arrangements that vary in the degree to which they allow customized learning.  These agreements range from contracts with a single nearby public or private school (leaving little room for customization per student), all the way to the other end of the spectrum where towns send “tuition” to any school that will accept the funds, in or outside the State of Maine.

Saco, Arundel and Dayton for example do not operate local public high schools.  Saco contracted with Thornton Academy in 1889, and its students have enrolled there ever since.  Arundel and Dayton also contract with Thornton; Arundel sends their sixth through eighth graders and Dayton sends their high school kids.  For ninth through twelfth grade, Arundel allows its kids customized learning through enrollment at schools including Thornton Academy.   Currently, Maine towns “tuition” well over 10,000 students a year to schools outside their residing localities.

The kids to the right, dressed in the uniforms of their respective “grown up” aspirations, for the purposes of this illustration are residents of Raymond, Maine.  The town of Raymond has withstood reorganization and consolidation threats to school choice throughout the twentieth and twenty-first centuries.  Therefore, kids who reside in Raymond are nevertheless privy to the opportunity of seven different schools in Maine.  The bubble thoughts are true to their situation today.  Their parents are able to offer them a customized education by evaluating a number of school options.  All of the schools, by way of their geography, emphasis, tuition, online courses, may have remarkable qualities.  However, there’s likely one school that will stand out as the best fit for their child, for the sake of foreign language courses or study abroad programs, their student’s talents or learning disabilities, transportation or ability to walk, career goals or current high school jobs, and more.

More than twenty-five of Maine’s private schools are approved to receive public funds in the form of “tuition” from towns without a local public school.  These private schools include L’Ecole Française du Maine in South Freeport, Stillwater Montessori School in Old Town, The New School in Kennebunk, and the Watershed School in Camden.  Of course those noted as options in the above thought bubble may also receive public funds.

John Bapst High School (Bangor), ranking first nationwide for the number of its students enrolled in college courses, has a body of which more than sixty percent of its students are tuitioned by towns throughout Maine.  At least eleven other private schools collect town tuition for more than sixty percent of their student body.

Private schools outside of Maine which have been approved for the receipt of tuition payments from Maine’s towns include Montessori High School at University Circle in Cleveland, Ohio, Dana Hall School in Wellesley, Massachusetts, and Emma Willard School in Troy, New York.  Town tuition payments to these schools may not exceed the cost of education for Maine’s state average public secondary student; that average is $8,873.46.

Maine’s newest additions to customized learning are charter schools, also recipients of tuition funds.  Maine became the forty-first state to allow for the founding of charter schools when Governor LePage signed L.D. 1553 into law in June of 2011.  Although this was a landmark victory for the world of customized learning, we still need to expand the charter school market.  Maine’s law allows authorization, given by the Charter School Commission, of ten charter schools within a ten-year span.  Local school boards, which are reputably less apt to push for the founding of neighborhood competition, may authorize an unlimited number of charter schools within that time frame.

The Commission, composed of seven members (three from the State School Board, and the other four nominated by the original three), was formed in the winter of 2011 and has since approved two schools for operation.  Having both opened their doors in 2012, Maine Academy of Natural Sciences (frequently referred to as MeANS) currently serves 46 high school students, and Cornville Regional Charter School has enrolled sixty kindergarten through sixth grade students.

This month, the Charter School Commission received five applications for proposed charter schools, two of which were virtual and had been denied in a review last year but recommended to resubmit come this past review cycle. The Commission approved only one out of the five proposed charter schools to move on with the authorization process; both virtual schools, again, were denied the next step in authorization.

The Commission utterly fails to recognize the inherent accountability system set up within the charter school law.  Charter schools are governed by a board independent of the local school system and, of course, rely on the enrollment of parents and students wanting customized learning.  The degree to which a charter school does or does not succeed is a direct reflection of the learning experience it offers.

Perhaps the most universal style of customized learning around the world is online learning. Often referred to as “anywhere, any time learning,” online learning is an education model whereby a student completes his coursework through internet-based programs.  Of course, this model can take many different shapes.  It is possible for a student to enroll in a full-time online learning program which is comprehensive of all the subject matter for his grade level. Or a student may take just one or a handful of courses online while he is enrolled in a traditional brick-and-mortar school.

Although Maine’s charter school law does allow provisions for a full time virtual charter school, use of this full-time virtual school model currently exists in Maine only in a home school situation where parents pay for it out of pocket (in addition to their taxes which in part fund the local public school system).

Founded in January 2012, the Maine Virtual Learning Consortium which was established by the Maine International Center for Digital Learning and RSU 19, offers eight courses including Latin, Anatomy and Physiology, and Art History.  Schools which choose to participate are called “Partner Schools;” they pay an annual enrollment fee and must contribute two one-semester online courses to be distributed for use throughout the other Consortium Partner Schools.

There are currently seven state-approved online learning providers for Maine. They are Advanced Academics, Apex Learning, Connections Academy, K12, Inc., Lincoln National Academy, PLATO, and Virtual Learning Academy. In recent years, Maine passed a multi-district online learning law by which districts can share online courses and therefore enroll their students in subject areas that they would not otherwise be able to offer due to school finances.

Demand for Customized Learning

Maine’s school enrollment trends, over a stretch of fifteen or more years, reveal to us the desire of parents and students for customized learning.  The Maine Department of Education has listed as far back as 1995 the annual attending enrollment for each category of public schools, private schools, and homeschooling.  As you can see in Chart 1, the public school enrollment in Maine has declined quite strikingly!

The primary reason behind the decline in public school enrollment is Maine’s “Demographic Winter” where Maine’s net natural population growth (births minus deaths) is negative. As a consequence, the younger cohort of Mainers is shrinking and, naturally, that translates into lower school enrollments.

Additionally, the level of private school enrollments and the popularity of homeschooling as depicted in Charts 2 and 3 have eroded public school enrollments. It’s safe to say that a large number of parents in Maine are searching for customized learning.  Without customized learning available through their town, they are presumably pulling their kids out of the local public school. Parents are then enrolling their kids, at their own personal expense, in various private schools and homeschooling which often cater better toward the unique needs of students.

The volatility is the result of the most recent recession, which officially ran its course between December 2007 and June 2009 according to the National Bureau of Economic Research. The recession affected all three categories of school enrollment.  Public school enrollment experienced a bump up during those years, but that increase was remarkably short-lived.  Private school enrollment took a sharp dip during the recession, and quickly rebounded about the same time that public school enrollment continued to decrease again.

Home school enrollment has fluctuated throughout the years but, overall, has most certainly climbed.  Note also the slight increase during the recession followed by a slight decrease following the recession.  We conclude that in hard financial times, some parents were forced to default to the local public school and homeschooling and after getting back up on their feet, re-enrolled their students in the private schools that best met their kids’ needs.

Conclusion

Customized learning is nothing new to Maine.  The seeds were planted with the founding of Maine’s academies and other private schools several hundred years ago. Unfortunately, customized learning has always been limited – offered only to those without a local public or contracted school and to those who are wealthy enough to afford a private school of their choice. Customized learning already exists in Maine – why not allow every Maine kid the opportunity?

Maine’s birth rate has been dropping off for years, and we just experienced for the first time a negative birth rate last year in 2012.   This same year also marked a negative in-migration rate. Maine is experiencing a “Demographic Winter” with too few young people to support the current population level.  Towns must find ways to provide a meaningful education when the traditional brick-and-mortar school model is becoming more difficult to sustain with ever-shrinking student enrollment.

We need creative solutions for today’s kids. Specialized career interests, Gifted and Talented programs, apprenticeship opportunities, foreign language courses and more are all what make individual public, private, charter, and online schools unique—almost as unique as the individual needs of our children. For the sake of our kids and for the sake of Maine’s future, expanded customized learning, as shown by Maine’s own history, is the best way to grow our economy and help our students succeed.

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Case Study #3: Cost of Obamacare could force retail operation out of business http://mainepolicy.org/case-study-3-cost-of-obamacare-could-force-retail-operation-out-of-business/ http://mainepolicy.org/case-study-3-cost-of-obamacare-could-force-retail-operation-out-of-business/#comments Wed, 19 Dec 2012 21:18:37 +0000 http://www.mainepolicy.org/?p=2466 Continue Reading →]]> The last of three cases studies on how Obamacare will affect real Maine businesses shows that the staggering increase in health insurance costs could actually force a retail operation into bankruptcy.

(Download the case study here.)

Depending on how many employees become eligible for Obamacare, the company would be compelled to spend either 54% or 134% of its profit margin to pay for health insurance. In the first scenario, spending more than half of the company’s profit margin on Obamacare would result in layoffs and other drastic cost-cutting measures.

In the second scenario, if the company had to spend 34% over and above its entire profit to fund Obamacare, it simply could not stay in business.

In the third scenario, the company could drop health insurance all together and pay the Obamacare penalties. But that would still cost the company 90% of its profit margin.

The Maine company analyzed for this case study is a retail business with 78 locations in Maine, New Hampshire and Vermont. The company employs an average of 800 employees, including 650 full-time employees who are eligible for the company’s health insurance plan. Presently, 160 of full-time staffers now participate in the health insurance plan, costing about $800,000 annually.

The case study analyzes the effect of an additional 368 employees joining the plan under Obamacare. In the first scenario, health insurance costs would increase $1.85 million annually. In the second scenario, costs would increase $744,000 each year. By dropping health insurance coverage, the company would have to pay annual Obamacare penalties of $1.24 million.

“Regardless of the intentions of Obamacare, the end result is that these higher health insurance costs amount to a ‘success tax’ on the company,” said Joel Allumbaugh, author of the case study and director of the Center for Health Reform Initiatives at The Maine Heritage Policy Center. “Naturally, this company is in business today because it has successfully met the needs of the marketplace and has justifiably earned a small profit as a reward for taking a risk.”

But the best-case scenario would cut this company’s profit margin in half. “Without cost reductions, such as lay-offs, the company would eventually be forced into bankruptcy,” Allumbaugh said. “In the worst-case scenario, the company’s health insurance cost would consume all of its profit margin, and the company would have to borrow money just to stay afloat. Not only would the employees not have health insurance, but they wouldn’t have a job, either.”

For more information about this case study or Obamacare, contact Joel Allumbaugh at jallumbaugh@mainepolicy.org.

 

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