Increases in the minimum wage will increase the cost of doing business for South Dakota’s public universities. The Board of Regents include in their December 2–4 agenda this summary of the fiscal impacts of the indexed increase to $8.50 that we South Dakotans approved at the polls this month, as well as the smaller (the Regents say “minimal”) impact of the President’s order that workers on federal contracts get a minimum of $10.10 an hour.

Source: South Dakota Board of Regents, "Minimum Wage," Agenda Item I-E, posted November 2014
Click to embiggen! Source: South Dakota Board of Regents, “Minimum Wage,” Agenda Item I-E, posted November 2014.

Complying with Initiated Measure 18 and Executive Order 13658 will cost our public universities $970,000 for the first full year. (Note that half that cost will be split halfsies between FY2015 and FY2016.) Students will bear 37% of that cost; taxpayers will bear 63%. Notice that Uncle Sam will cover about a third of the taxpayer cost and over a fifth of the total cost.

The total cost of paying a higher minimum wage on campus will be 0.12% of the Regents’ current $793-million operating budget. The same money could hire 11 full professors. It would pay for just 40% of the $2.4 million the SDSU Foundation is spending to build President Chicoine a new house and meeting center across from Woodbine Cottage.

Saudi Arabia gave a Black Friday gift to to world oil market. The Saudis have persuaded their OPEC partners to sustain OPEC’s current oil production rates (30 million barrels per day) rather than cutting production to pull oil prices out of their current slide. The Saudis’ main objective is to crush North American producers with low prices and regain market share.

Remember that our country’s booming oil production is based on hydraulic fracturing, or fracking. 80% of the fracking fields in the U.S. require oil prices of $80 per barrel or more to remain profitable. Canadian oil firms have been making their budget projections around assumptions of oil hanging around $80 per barrel. Immediately after OPEC’s decision, the price for North American oil, West Texas Intermediate, dropped to $69.05.

Venezuelan Foreign Minister Rafael Ramirez confirms the basic profit equation and declares himself a friend of U.S. environmentalists opposed to fracking:

“OPEC is always fighting with the United States because the United States has declared it is always against OPEC… Shale oil is a disaster as a method of production, the fracking. But also it is too expensive. And there we are going to see what will happen with production,” he said [Alex Lawler, Amena Bakr and Dmitry Zhdannikov, “Inside OPEC Room, Naimi Declares Price War on U.S. Shale Oil,” Reuters via KELO Radio, 2014.11.28].

If you’re pumping gasoline into your car, you should be cheering this price war, right? Cheaper oil means cheaper gasoline, which means we can all drive around and buy more stuff, stimulating the economy.

The OPEC price war could save North Dakota from the ills of petro-state chaos and corruption. American drillers aren’t going to keep pumping oil at a loss out of patriotism or a love of the view of Minot from the man camps. The Saudis drove Americans out of the oil business in 1986; they could do it again.

The OPEC price war could also make the Keystone XL pipeline disappear. Canadian tar sands oil requires a price of $85 per barrel to make scooping that goop profitable.

For bonus geopolitical excitement, the Russians need $100 per barrel to balance their budget. Vladimir Putin will have a hard time continuing his invasion of Ukraine if low oil prices threaten a repeat of the Soviet collapse. Then again, Putin is not Gorbachev. Faced with economic hard times, rather than retreating, restructuring, and releasing his grip on his neighbors, Putin might lash out, reaching for more land, resources, and power.

But then we get to a strangely familiar and ugly economic scenario. Big banks have made big loans to finance Big Oil in North America. The frackers carry a lot of junk-bond debt. If oil stays low, we could see defaults that could create another financial crisis:

Based on recent stress tests of subprime borrowers in the energy sector in the US produced by Deutsche Bank, should the price of US crude fall by a further 20pc to $60 per barrel, it could result in up to a 30pc default rate among B and CCC rated high-yield US borrowers in the industry….

“A shock of that magnitude could be sufficient to trigger a broader high-yield market default cycle, if materialised,” warn Deutsche strategists Oleg Melentyev and Daniel Sorid in their report [Andrew Critchlow, “Oil Price Slump to Trigger New US Debt Default Crisis as OPEC Waits,” UK Telegraph, 2014.11.14].

Critchlow hears 2007 all over again. Just like bankers underwriting real estaters in a housing bubble pre-2007, bankers are underwriting oilers in an oil bubble based on possibly unsustainable prices. The Saudis are now popping the bubble.

But if the joys of cheap gasoline are crushed by the pain of junk-bond defaults, at least you’ll be able to blame Obama right alongside the Saudis:

…This rush to pump more oil in the US has created a dangerous debt bubble in a notoriously volatile segment of corporate credit markets, which could pose a wider systemic risk in the world’s biggest economy. By encouraging ever more drilling in pursuit of lower oil prices, the US Department of Energy has unleashed a potential economic monster and pitched these heavily debt-laden shale oil drilling companies into an impossible battle for market share against some of the world’s most powerful low-cost producers in the Organisation of Petroleum Exporting Countries [Critchlow, 2014.11.14].

The Saudis are dropping our gasoline prices more surely than anything Mike Rounds or Kristi Noem has promised us. OPEC may shut down fracking and Keystone XL more effectively than any spirit camp. But the potential for a financial crisis that could swamp the  benefits of cheap gasoline should make us beware Saudis bearing gifts.

Why is South Dakota beating Minnesota on freshman import-export ratio? One logical explanation is price. According to the FY2014 Accountability Report to the Council on Higher Education Policy Goals, Performance, and Accountability that the Board of Regents will discuss at next week’s meeting, South Dakota offers the best bargain on higher education in the region for out-state students:

Source: p. 21
Source: South Dakota Board of Regents, FY2014 Accountability Report to the Council on Higher Education Policy Goals, Performance, and Accountability, posted November 2014, p. 21

South Dakota’s the best deal in America’s upper middle for non-resident undergraduates, resident graduate students, and non-resident graduate students. Oddly, we short our own resident undergraduates, who could go to school more cheaply by taking up residence in North Dakota, Idaho, Montana, Wyoming, or Nebraska.

This Regental report acknowledges that a higher percentage of South Dakota students graduate in debt than in 48 other states (only New Hampshire at 76% beats our 72%). But as demonstrated by our lower costs and remarkably low student-loan default rate, those students have more manageable debt. The same outfit that ranks us #2 for percentage of students in debt agrees, ranking our average student debt 29th in the nation.

p.s.: The Regents offer a separate report on graduate debt, which notes that the percentage of South Dakota public university students graduating with debt has declined from 84% in 2006 to 72% in 2013. South Dakota’s private institution grads were following a similar arc through 2009 but then bounced back up above 80%.

Next week the South Dakota Board of Regents will discuss Dr. Joseph A. Hartman’s review of the geology and geological engineering program at the South Dakota School of Mines and Technology. The UND geology professor visited campus last April. His findings support the argument I find myself making all too often about South Dakota’s education funding: money by itself does not guarantee better education, but sometimes you have to spend more money to meet basic needs.

Dr. Hartmann identified a number facilities upgrades that will require spending in the coming years:

  • GGE classroom and teaching facilities cannot support the 5% annual increases in undergraduate enrollment increases mandated by the Mines 2020 Strategic Vision and Plan.
  • GGE laboratory sections require “hands-on” training and there is little room for either larger lab sections or increased numbers of lab sections.
  • Mineral Industries (Ml) building requires renovation because of circuitry, HVAC, and asbestos.
  • New space for GGE is a top priority in Mines 2020 Capital Campaign fund-raising [Dr. Joseph H. Hartman, South Dakota School of Mines and Technology Geology and Geological Engineering program review, 2014.08.24, p. 17].

If we want more scientists and engineers, the students we train to that end will need more classrooms and laboratories to develop the skills we crave.

Dr. Hartman also identified some equality issues that require some fiscal will:

One that resonated was access to female bathrooms on all floors in the GGE building. Because of course scheduling conflicts (back to back, as a simple example), women students are not able to visit a bathroom conveniently and thus be late for class. They considered this a Title IX concern.

Subsequent to my visit I learned that “The lack of women’s bathrooms on the first and third floor of the building is well known to all women faculty, staff, and students who use the building and the latter two groups have made periodic requests to facilities and the administration to remedy it. The bathrooms were renovated several years ago but, inexplicably, the male restroom on the second floor was made co-ed, but no attempt to provide female restrooms on the other floors was made” (Maribeth Price, August 2014). Apparently, this is a failure of the School to address a long-standing problem despite faculty and student concerns and repeated requests [Hartman, 2014.08.28, p. 9].

Dr. Hartman also notices a lack of electronic journals and a lack of funding for trips to academic conferences.

Classrooms, laboratories, and bathrooms don’t just bubble up from the ground like the lava our Hardrockers study. Professional geologists don’t come from walking around the courtyard having Socratic dialogues. Fulfilling its mission requires spending more money. We’ll find out this session whether our Legislature is willing to put its money where its mouth is, or whether it will continue to expect professors and students to find their own resources.

Congress did get a few things done this year. In August, Congress passed and the President signed the Veterans Access, Choice, and Accountability Act. This new law attempts to clear the appointments backlog at Veterans Administration facilities by allowing VA patients to get care at non-VA facilities. The bill also authorized the VA to spend money to improve access and infrastructure and specifically exempted this funding from pay-as-you-go requirements, adding $12 billion to the deficit.

The new law also denies federal higher education benefits for courses taken in states that charge veterans and family members more than in-state tuition. This provision should affect fewer than 4,000 veterans. 27 states already offer veterans resident tuition rates, regardless of when they arrived.

South Dakota already exempts veterans from its twelve-month residency requirement. The Board of Regents is proposing legislation to extend those benefits to veterans’ spouses and children to comply with VACAA by its July 1, 2015, enactment date.

South Dakota has a provision allowing other children to establish residency sooner than twelve months if they can show their parents aren’t just gaming the residency rules. But are there any classes of citizens besides veterans who should get automatic South Dakota residency? How about clergy, who move their families at the will of their synods to serve our nation’s spiritual security? How about oil workers serving the nation’s energy security needs in the Bakken but locating their families in Spearfish or Aberdeen to keep them away from the hard life of the oil fields? How about agricultural workers serving our nation’s food security as they move here to harvest our crops and milk our cows?

If we can exempt veterans and their families from rules on deficit spending and residency, can we give similar special treatment to other groups vital to the nation’s well-being?

At next week’s meeting on the School of Mines campus, South Dakota’s Regents will discuss allowing our six public universities to fund scholarships with tuition remission and late-payment fees. The information sheet accompanying that agenda item itemizes the current sources of scholarship money on each campus and breaks down how much money goes to athletic scholarships and how much to general scholarships.

Scholarships FY2014 Institution-funded athletic Institution-funded general Foundation-funded athletic Foundation-funded general Total Athletic/ Total
BHSU 41,912 62,180 416,738 646,075 1,166,905 39.30%
DSU 74,615 0 210,968 494,675 780,258 36.60%
NSU 0 60,000 992,031 823,937 1,875,968 52.88%
SDSM&T 0 0 789,284 1,675,074 2,464,358 32.03%
SDSU 2,744,037 1,637,612 886,230 4,589,191 9,857,070 36.83%
USD 2,524,445 126,792 746,910 5,643,805 9,041,952 36.18%
System 5,385,009 1,886,584 4,042,161 13,872,757 25,186,511 37.43%

In the last academic year, our six public universities mustered $9.4 million to lower tuition for the providers of our gladiatorial entertainment. That’s 37% of the total scholarships our Regental system handed out. Notice the only university whose athletic support notably exceeds that average is Northern State: Aberdonian athletes get almost 53% of NSU’s scholarship dollars.

Tornberg
Ann Tornberg

The hardest political job in South Dakota now has two candidates. Ann Tornberg publicly joins Jeff Barth in seeking to chair the South Dakota Democratic Party.

Tornberg issued her press release yesterday, one day after Barth sent out his official pitch. Both Tornberg and Barth promise to reinvigorate the county party machine. Both mention the need for more diversity in the party: Tornberg speaks of registering more voters among “diverse constituencies”; Barth promises to recruit more youth and minorities as party leaders and candidates. Both mention a focus on fundraising.

Tornberg’s and Barth’s opening pitches differ on a few details. Tornberg emphasizes her fundraising skill, noting that she has recruited 20 new members of the Founders Club, the SDDP’s base of sustaining donors pledging $120 or more each year. Barth emphasizes his ability to win elections as a Democrat amidst steamrolling Republicans.

Barth is a chess champion; Tornberg is a debate coach. This contest should be fun!

South Dakota Democrats now have two chair candidates from the southern I-29 corridor. If Rick Weiland announces, that would make three. West River, do you have an up-and-comer who’d like to jump in the fray? If these southeast South Dakotans split up the vote, a Black Hills or Pine Ridge candidate could consolidate the West River vote, work on northeast South Dakota, and pull out a victory as the I-29ers split up the big votes.

Sift through the candidate statements and the proportional-voting math, see if you can divine a chair-apparent!

Ann Tornberg announces she is running for SDDP Chair

Beresford, SD – Ann Tornberg, Chair of the Union County Democrats, announced that she is running for South Dakota Democratic Party Chair today. The election will be held among state central committee members on Saturday, December 13th, in Oacoma.

Tornberg released the following statement:

“Our state party has made a lot of progress over the last four years, but we’re still not seeing results at the ballot box. I want to help change that.

I’m running for South Dakota Democratic Party Chair because we need to rebuild our county parties, raise money to expand our outreach, recruit a full slate of candidates at the local, state and federal level, and register new voters among diverse constituencies.

Working together from the bottom up, Democrats across the state can build on the progress we’ve made and fulfill the promise George McGovern instilled in our party to win elections up and down the ballot.

I look forward to hearing new ideas on how we can reach our goals and sharing my ideas during the Chair election and after.”

Ann is a proven leader in the South Dakota Democratic Party. Ann is the Union County Democrats Chair, and she’s a sitting member of the party’s Executive Board. A long time Founders Club member, Ann has personally recruited over 20 new sustaining donors into the Founders Club program. Ann was instrumental in the creation of the first ever Young Elected Legislative Leaders program for high school Democrats, which has already hosted over 80 students in just two years. Last year, she served as House Secretary for Democratic legislators in Pierre and will return to the 2015 Session as Senate Secretary. Ann has run for state legislature, raising over $40,000 in her 2014 bid for state senate.

A retired high school English teacher and former President of the Sioux Falls Education Association, Ann places education funding and the teacher shortage as one of her highest priority issues. She is also a family farm owner and works with groups such as Ag United, SD Dairy Producers, and SD Farmer’s Union to promote agriculture and educate consumers [Ann Tornberg, press release, 2014.11.26].

While my comment section lights up with debate about whether Jeff Barth agrees with us on enough policies to chair the South Dakota Democratic Party, Republican Rep. Steve Hickey announces he’s teaming with Democratic consultant and über-barista Steve Hildebrand to put a payday loan interest cap on the ballot:

Though they disagree on issues like same-sex marriage, they do agree on one thing: payday loans exploit South Dakota’s poor and elderly.

“We are planning, and have been planning, to bring this thing to the ballot in 2016,” Hickey said. “The polls are on our side, the people in South Dakota understand that 36 percent is enough interest rate for a person to make some money” [Todd Epp, “Hickey, Hildebrand Form Group to Put Payday Loan Interest Cap on Ballot,” Northern Plains News, 2014.11.26].

Rep. Hickey got burned by the payday lenders last session, when the usury industry betrayed him on viable compromise legislation that the industry recommended to check abuse of consumers. Rep. Hickey is now following up on the initiative vow he made last winter to subject the payday lenders to the rate-capping wrath of the voters, and he’s getting Steve Hildebrand to help bring the fight.

Hickey and Hildebrand are one of the oddest South Dakota couples we could cobble together. They disagree vehemently over social issues. But if they birth this rate-cap initiative, they could model for us all how South Dakotans can work around their radically different views to identify common goals and produce practical solutions.

Having to dig deeper than I to find reason to be thankful this fine holiday is attorney Brandon Taliaferro, whose appeal for expungement was rejected by the South Dakota Supreme Court this week. In a ruling filed Tuesday, a unanimous court said that the wording of the law prevents them from doing Taliaferro the justice of erasing from his record his arrest for crimes of which he is completely innocent.

Recall that Taliaferro was trying to help foster children who had been sexually abused by Richard Mette, who went to the penitentiary for his crime. For what seems explicable only from a nasty political perspective, the state cooked up seven charges against Taliaferro revolving around the idea that he and social worker Shirley Schwab tried to coax the foster children into providing false testimony against Richard Mette and his wife Wendy. The state utterly failed to make its case. Judge Gene Paul Kean threw the case out at the close of the state’s arguments, saying the state had failed to offer any evidence requiring a response from the defense. This year, Circuit Court Judge Gene Paul Kean expunged five of the seven charges for which Taliaferro was wrongly arrested.

But prosecutor Michael Moore dismissed one charge before the acquittal and another before it was brought to trial. When Taliaferro asked that those two baseless charges be expunged, Moore said no. The state had no problem expunging eleven felony child abuse charges from Wendy Mette’s record, even though the state had triable evidence to support those charges. But Taliaferro had to appeal to the Supreme Court for similar relief.

The Supreme Court says it cannot provide that relief. Justice Lori Wilbur says the plain language of SDCL 23A-3-27 lets the prosecuting attorney do what Moore has done and what Attorney General Marty Jackley has supported: bring baseless charges against an innocent man, dismiss those charges before facing the withering scrutiny of court and an embarrassing acquittal, then chain the wrongly accused man with an arrest record that he has to explain to every future employer. Justice Wilbur acknowledges that the result is “unfavorable” and “harsh” but writes that Taliaferro’s “appropriate avenue for relief in this case is through the Legislature.”

[cross-posted in South Dakota Magazine]

Turkey Day is here! In a political year filled with turkeys, I can still find aspects of South Dakota politics for which to be thankful. If you’re game, here are some political items I’ll happily toast at the table with you this year.

1. I’m thankful fellow Madison HS debate alumnus Rick Weiland is signaling a desire to stick around and stay involved in South Dakota politics. Sure, he got beat in the Senate election, but he mounted an ambitious statewide campaign that can open the door to conversations and useful campaign connections for 2016. We Dems should resist the impulse to throw losers overboard and instead learn from failure. If Weiland is willing to help, let him help!

2. Ditto for Larry Pressler. He proved himself an intelligent policy wonk throughout the campaign, and now he sounds like he wants to lead more conversations with South Dakotans about policy and practical political problem-solving. In that noble and neglected cause, we can use all the help we can get.

3. I’m thankful Mike Rounds is headed to Washington… solely because it will give us a chance to test the Pressler hypothesis that national media will now be motivated to look into the corruption and illegal activity that took place under Rounds’s watch in South Dakota’s EB-5 program. I don’t cheer a wounded senator, but I do cheer the pursuit of truth.

4. I’m thankful my party’s poor performance in the midterm election has motivated some grassroots activists to mount their own effort to build resources for Democrats in 2016.

5. I’m thankful that, once again, South Dakota voters demonstrated that Democrats can win on policy.

6. I’m thankful that political fakers Annette Bosworth and Chad Haber disappeared from the general election scene. Now if only South Dakota’s schemiest political couple would use their ongoing fundraising to pay the employees and contractors they’ve stiffed.

7. I’m thankful Marty Jackley has not taken his status as the most popular Republican in South Dakota as a mandate to impose martial law on bloggers critical of the Attorney General’s office.

8. I’m thankful Dennis Daugaard says this year was his last election. A governor who doesn’t have his eye on the next election and the millions need to win it may be a little more focused on solving problems for all of us in Pierre.

9. While I lament low voter turnout, I’m thankful that the 40,000-voter decline in participation from the 2010 midterm means that we’ll need 2,000 fewer signatures to put laws on the ballot in 2016 and 2018. Sometimes less democracy means more democracy!

10. I’m thankful that, no matter the outcome of the election, I still find plenty of fellow South Dakotans who want to read, discuss, and debate South Dakota politics.

Thank you, friends! Now please pass the green-bean casserole.