What will the casino initiative do for Cleveland students?

Not much, as far as I can see.

With Frank Jackson and other local political leaders jumping on board the so-called Learn and Earn ballot issue — the Constitutional establishment of a couple of big downtown slot machine parlors controlled by Al Ratner and Jeff Jacobs, throwing off money to a Board of Regents scholarship fund and to local governments — it seems wise to ask if this is actually a serious tool for increasing the number of Cleveland kids going to college.

Here’s how the proposed amendment describes its tuition assistance program:

Eligibility criteria for such scholarships and grants, and the amounts, shall be established solely by the Ohio Board of Regents. Such scholarships and grants shall include only the following:

(A) Individual learn and earn scholarship accounts for current and future students who, prior to enrolling in college, take core and advanced academic courses, participate in college readiness programs, assessment, and testing at any accredited public or non-public high school in this state, and contribute to public life through voluntary civic activity, and who attend any public or independent not-for-profit institution of higher education authorized by the Ohio Board of Regents and that has its principal office within this state.

(B) For the first twelve such high school graduating classes, uniform tuition grants, in an amount not to exceed the average undergraduate tuition charged by Ohio public universities, shall be awarded to the top five percent of students at each accredited public and non-public high school who attend any public or independent not-for- profit institution of higher education authorized by the Ohio Board of Regents and that has its principal office within this state. Such tuition grants shall be based solely on academic merit.

So, we have heavy tuition subsidies at Ohio colleges for the academic top 5% of each school’s graduates, classes of 2009 through 2020 only, who go to those colleges. Then, from what’s left of the 30% of casino proceeds going to the Regents — which the Learn and Earn backers say will be about $850 million a year — each Ohio K-12 schoolkid gets a “Learn and Earn account” with a deposit for each year the kid completes a curriculum specified by the Regents. When the kid graduates, he/she gets to use whatever he/she has accumulated to help pay tuition at an Ohio college.

Neither the “top 5%” scholarships nor the account deposits are tied to financial need. The top 5% of graduates of Hathaway Brown and University School who decide to attend Ohio schools will get the same dollar subsidy as the top 5% of Cleveland Public School graduates. And all two million kids in Ohio K-12 schools, public and private, will get the same annual account contributions if they complete the Regents’ requirements… no need-based`targeting permitted. (If anything, the targeting is to middle and upper-middle income kids who are more likely to be on the college track.)

So… what will this do to help Cleveland kids go to college?

While exact numbers are not easily available, a liberal estimate of Cleveland residents now graduating from public and private high schools is 3,500 a year. If 60% of these kids go to college, and 90% of them attend Ohio institutions, that’s a total of 1,900 eligible for Learn and Earn assistance of some kind, starting with the class of 2009.

The top 5% of this group would include fewer than 100 Cleveland graduates each year. That’s the top 5% of Ohio-college-bound graduates in each CMSD school building — the top 5% from Arts, the top 5% from Rhodes, the top 5% from East, from Glenville, from Max Hayes, etc. — plus the Cleveland kids (if any) who make it into that top college-bound 5% at St. Ed’s, Ignatius, Magnificat, St. Joseph’s, et al.

It will work out to one, or two, or three, or five kids at most from each high school — the kids nearest the top of their classes, many of whom will already be in line for scholarships from other sources.

Other than this very thin upper academic crust, how much help will Learn and Earn provide to other graduates trying to finance college? Well, this is all very iffy because the proposed amendment leaves so much up to the Regents. But here’s a way to estimate it:

For each year from 2009 on, take the proponents’ own estimate of $852 million a year going into the L&E fund by 2012. Assume we reach this amount by steady increments in the first four years (2009-2012), and remain there in subsequent years, adjusted for inflation. Assume that the current average tuition at state-run colleges rises from $8,000 today to $8,500 by 2009, and continues to rise only at the rate of inflation, i.e. remains stable in 2009 dollars. Assume that there continue to be two milllion Ohio kids in grades K-12, that one out of thirteen (154,000) graduate annually, that the top 5% for L&E’s purposes is thus 7,700, and that about half of all graduates will actually use their L&E accounts by attending Ohio colleges (which is about right based on current numbers from the Regents).

Then we get this formula, for, e.g., 2012:

$852 million - $262 million in “top 5%” subsidies = $590 million, divided by one million qualifying K-12 students = $590 available for deposit into each student’s L&E account in 2012.

From a spreadsheet based on this formula, here are the amounts I calculate that students in the first ten graduating classes could hope to “save up” in L&E scholarship money by the time they need it:

Remember, the four year tuition cost at Cleveland State or KSU is already over $30,000. So if I’m right, by the tenth year after the casinos open, an Ohio graduate heading for a state university could hope to cover less than one-sixth of tuition and fees with Learn and Earn money. In earlier years — for kids now in grades six through nine, for example — the impact of Learn and Earn on college affordability would be, well, negligible.

So for Cleveland, the big educational payoff of Learn and Earn would come down to fewer than twelve hundred significant scholarships to Ohio colleges between now and 2020, along with “college accounts” for other students that would be very little help to at least the next ten graduating high school classes.

Anyway, that’s how it looks to me. I await better information from anyone who can provide it.

WSJ: Boardroom profiteering on 9/11 stock slump

Amazing how many tales are hidden behind that Wall St. Journal paywall. A couple of weeks ago I wrote about the apparent fact, covered only in the Journal, that Verizon is trying to sell off its entire phone business in Ohio and three other Midwest states. Today we learn this (WSJ story as quoted by The Big Picture):

On Sept. 21, 2001, rescuers dug through the smoldering remains of the World Trade Center. Across town, families buried two firefighters found a week earlier. At Fort Drum, on the edge of New York’s Adirondacks, soldiers readied for deployment halfway across the world.

Boards of directors of scores of American companies were also busy that day. They handed out millions of bargain-priced stock options to their top executives.

The terrorist attack shut the U.S. stock market for days. When it reopened Sept. 17, stocks skidded more than 14% over five days, in the worst full week for the Dow Jones Industrial Average since Germany invaded France in May 1940. But for recipients of options, the lower their company’s stock price when options are awarded the better, since the options grant a right to buy shares at that price for years to come. The grants set recipients up for millions of dollars in profit if the shares recovered.

A Wall Street Journal analysis shows how some companies rushed, amid the post-9/11 stock-market decline, to give executives especially valuable options. A review of Standard & Poor’s ExecuComp data for 1,800 leading companies indicates that from Sept. 17, 2001, through the end of the month, 511 top executives at 186 of these companies got stock-option grants. The number who received grants was 2.6 times as many as in the same stretch of September in 2000, and more than twice as many as in the like period in any other year between 1999 and 2003.

Ninety-one companies that didn’t regularly grant stock options in September did so in the first two weeks of trading after the terror attack. Their grants were concentrated around Sept. 21, when the market reached its post-attack low.

I urge you to read the whole Big Picture post.

Please note, this is not the old conspiracy-theory tale of insider trading before the September 11 attacks. No, this is the WSJ documenting another kind of conspiracy — a concerted rush by some of the country’s richest, most powerful “leaders” to make as much money as possible from the ruined lives around them. As Big Picture notes:

What makes this so pathetic is that corporate executives could have stepped up AND BOUGHT STOCKS IN THE OPEN MARKET if they believed they were so cheap. It would have been reassuring to a nation to see the leaders of industry voting with their own dollars. It might have made the subsequent economic slow down and period of tense aftermath less painful.

Instead, these weasels decided to loot the treasury at the first opportunity. America was smouldering, the WTC lay in ruins, and this group of classless pigs decided it was time to pocket some cash. (Heads-up from MaxSpeak.)

Update: More details at The Raw Story including this WSJ excerpt (emphasis added by me):

The 91 companies included such corporate icons as Home Depot Inc., Black & Decker Corp. and United Health Group Inc. It included two companies directly touched by the tragedy. Merrill Lynch & Co., across the street from the Twin Towers, lost three employees. On Sept. 24, Merrill granted its president options to buy more than 750,000 shares, at a price 15% below the pre-attack level. At Teradyne Inc. in Boston, an employee delayed a business trip until Sept. 11 to attend a son’s soccer game and died on American Flight 11. Teradyne that month gave its CEO more than 600,000 options at a price enabling him to buy stock at 24% below its pre-attack level.