Paul Sullivan writes about strategies that the wealthy use to manage their money and their overall well-being.
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Friday, March 29, 2013
The disclosure of student records to the inBloom data services is allowed by two different provisions in FERPA. The first provision allows schools to disclose student records to
school officials with a legitimate educational interest in the records, including private
contractors hired by a school district, when the student records are needed to provide the contracted services. This applies to inBloom, which is contracted by school districts to
provide technology services for school administrators and teachers.
USED spelled out rules authorizing disclosure of student records to school district
contractors in 2008 (see section 99.31(a)(1)(B)); however, this type of disclosure was
consistently allowed long before it was codified in 2008 (for example, see this 2004
USED advisory opinion).
Sunday, March 24, 2013
Learning How to Hedge Yourself, and Not Just Your Portfolio
Published: March 5, 2010
HOW much are your working years worth? Or put another way, what is the impact of joblessness on your financial future?
With nearly 10 percent of Americans unemployed and investment portfolios still down from their peak, the value of work has been given new importance.
Economists have long debated the difference between human capital (your future earnings) and financial capital (your investments). But there has often been too little emphasis on human capital until it is too late.
“If the stock market goes down, would your income increase, decrease or not change?” asked Michael Gordon, first vice president for agency-life operations at New York Life Insurance. “If you’re doing bankruptcy consulting, it might increase. If you’re a stockbroker, it might decrease. If you’re a tenured professor, it might not change.”
This is the difference between financial capital, which would be affected regardless of your job, and human capital, which is linked to the health of your company and to the health of the industry it’s in. And while this discussion used to be an academic exercise, it is now a practical reality for many people.
A year after the stock market hit bottom, plenty of people are out of work and spending their retirement savings much sooner than they had planned. This was surely not part of any of their asset allocationstrategies.
Most people used to look at human capital only to imagine what would happen if they died or could no longer work. But now there is another way: what effect will losing your job have on your future financial well-being? Let’s look at both of them.
IF YOU DIE Typically, people buy life insurance when they have something to protect. They get married, for example, or they have children. But they often buy it arbitrarily — $1 million sounds like a lot to some people, but if they earn $150,000 a year, that is less than seven years of income. Now imagine if they died at 35 with two children. Their family would lose out on 30 years of earnings.
New York Life and Ibbotson Associates, an investment advisory firm, have developed a program to help people calculate the replacement cost of lost earnings. The intent is obviously to determine if someone should buy life insurance. But the process is more illustrative than that. The questions force the respondent to detail all the people and expenses he is responsible for and what he would leave uncovered without enough insurance.
In addition, the model calculates the volatility of a person’s earnings over his remaining work years. A tenured professor’s income would be far more stable than a stockbroker’s. If both were 30 and made $120,000 a year, the professor’s human capital would be valued at $2,270,000, while the stockbroker’s would be $2,110,000. They would rarely make the same amount, of course, but the professor’s replacement income is higher because of the stability of his job.
“Once I found out how much human capital you have, I have to find a way to hedge it,” Mr. Gordon said. “We wanted to find a way to answer that consistently.”
Put another way, the longer you work, the less the amount of earnings you have to insure. “As I age and work my way through my career, there’s less human capital to replace,” said Stephen Horan, head of private wealth at the CFA Institute, an association of investment professionals. “I would have converted much of it to financial capital.”
IF YOU LOSE YOUR JOB The notion of human capital has become more immediate in light of the high unemployment rate. The loss of your job is often not up to you. But you do have control over not allowing your job and investments to be correlated.
“People have learned in the last few years that their human capital is much more sensitive to the financial markets than they thought,” said Moshe Milevsky, a professor of business at York University in Toronto and the author of the book, “Are You a Stock or a Bond?” (FT Press, 2008).
The key is to make sure your human and financial capital are not correlated. Mr. Milevsky said he viewed himself as a bond, because as a tenured professor his salary did not fluctuate. So he can take on more risk in his investment portfolio.
But he pointed to a midlevel employee at Lehman Brothers as a stark example of a person who would have been a true stock: her earnings were tied to the company, which went bankrupt, and her investments were probably also tied up in Lehman Brothers stock.
This, obviously, is what you want to avoid: the perfect correlation between human and financial capital.
HUMAN CAPITAL IN PRACTICE Unlike financial capital, human capital cannot be monetized. You can sell all of your stocks and sit on the beach, but you cannot cash in the next 10 years of earnings. And that is why it needs to be well managed.
“Everyone has to make the assessment of how marketable their skill set is or how transferable,” Mr. Horan said. “My human capital is squarely tied to the financial industry. Other folks can span different industries, like a human resource person.”
This assessment is crucial to calculating your financial capital. Consider these two situations. A real estate developer would have his human capital linked to what he is building but also to the interest rates on the loans for those properties. Fluctuations in either one could affect his earnings. Excluding additional real estate and credit market risk from the developer’s portfolio would be smart, but Mr. Horan said the developer might want to go further and short an exchange-traded fund focused on real estate, betting, in other words, that its value would decline. “This would hedge the exposure that exists in your labor,” he said.
In the second example, Mr. Horan said a high-earning investment banker should have a conservative investment portfolio. “The value of his labor is going up and down very closely with fluctuations in the market,” he said. “And one of the reasons investment bankers get paid a lot is there is a lot of inherent risk — it’s feast or famine, and you’re at an organization’s beck and call.”
WHERE’S THE RISK? Proponents of counting human capital in any asset allocation like to differentiate it from discussions about risk. In fact, Mr. Milevsky goes so far as to say there is too much emphasis on a person’s risk tolerance.
“Before I have had my espresso in the morning, I’m more risk-adverse,” he said. “When I turn on CNBC and see the markets are up, I’m more risk-tolerant.”
But his point is a serious one. If you are young and have many working years ahead of you, your human capital is high, and you can take more financial risk. Just how much depends on the person. Are you comfortable taking that risk?
That is where the discussion of human capital is supposed to be less emotional. “Even very risky human capital is more bondlike than stocklike,” Mr. Gordon said. “The question is really, are you more like a junk bond or a Treasury?” Determining that could help you avoid the double whammy of losing both human and financial capital.
Sunday, March 3, 2013
Unpreparedness is cited in common-core survey
By Catherine Gewertz, Ed Week
Even as the Common Core State Standards are being put into practice across most of the country, nearly half of teachers feel unprepared to teach them, especially to disadvantaged students, according to a new survey.
The study by the EPE Research Center, an arm of Editorial Projects in Education, the publisher of Education Week, found deep wells of concern among teachers about their readiness to meet the challenges posed by the common core in English/language arts and mathematics.
"Teachers are under tremendous pressure," said Lisa Dickinson, an assistant director of educational issues for the American Federation of Teachers, which conducts several common-core training programs in school districts each month. "The new standards do require a major shift in instruction. And the needed supports really aren't there."
Teachers in adopting states were asked to rate their preparedness on a scale of 1 to 5, with 5 being "very prepared" and 1 "not at all prepared." When asked how prepared they were to teach the common core to their own students as a whole, 49 percent rated themselves a 1, 2, or 3.
More than two-thirds said they were not well enough prepared to teach the standards to English-language learners or students with disabilities. More than half said they were not yet ready to teach them to low-income students or those considered at risk of academic failure.
Another survey, released last week, however, found teachers feeling confident about their readiness to teach the new standards.
The Neediest Students
The EPE study, based on an online survey conducted in October, is not nationally representative of U.S. teachers. It is drawn from 600 K-12 educators who are registered users of edweek.org.
But the sample is quite diverse, drawing on K-12 teachers, school-based curriculum coordinators, instructional coaches, content specialists, and department leaders in cities, suburbs, small towns, and rural areas, and in schools of all sizes, serving students of varying income levels. As such, it is one notable gauge of how the precollegiate world is responding to the expectations of the common standards, which have been adopted by 46 states and the District of Columbia.
And that gauge shows pronounced worry that teachers, students, districts, and states are far from ready to make the common core a success in the classroom, a little more than two years from when the first tests on the standards are scheduled to be given.
Students with special challenges, such as learning disabilities or limited English proficiency, appear to be particularly at risk of not being well served, since educators said they were the least prepared to teach those students. Even teachers who have had more rather than less professional development in the common standards reported that they were the least ready for those subgroups of students.
Three-quarters of those who have had more than five days of training said they felt prepared to teach their own students as a whole, compared with one-third of those who had had less than one day of professional development.
Six in 10 of those with more than five days of preparation felt ready to teach low-income students or those academically at risk, compared with about one-quarter of those who had had less than a day of professional development.
Students with disabilities and English-learners posed the greatest challenges: Only four in 10 of the teachers who have had more than five days of professional development in the common core felt prepared to teach the standards to such students. Fewer than 14 percent of those with less than a day of training said they felt ready.
While teachers' sense of readiness to teach the common core tracks with how much professional development they've had, the survey shows nearly three in 10 have not had any such training at all. Of the 70 percent who have, 41 percent have had four days or more. Three in 10 have had only one day or less. Thirty-one percent reported having had two to three days of professional development.
Many in education contend that the common standards demand significant changes in pedagogy, and, in some cases, teachers' content knowledge. In math, for instance, students are being asked to demonstrate their understanding not only of procedures, but also of their conceptual underpinnings. In English/language arts, they're expected to marshal evidence from what they read to support arguments and build their muscle with informational texts.
The most frequently addressed subject of professional development was English/language arts, followed by math and a comparison of the common standards with states' previous standards. Curriculum resources and collaboration with colleagues to teach the standards were also popular topics of professional development.
The least-frequent topic of professional development was how to teach the standards to subgroups of students. Only 18 percent of those who have had some training said it explored that area.
That's a worrisome sign for some of the neediest students, said Sherida Britt, who oversees some of the professional-development activities conducted by the Alexandria, Va.-based group ASCD.
"We have to look at what teachers are saying and give them opportunities to engage in professional learning that addresses these issues and the needs of those particular students," she said.
Although research has shown that job-embedded professional development is the most effective kind, only three in 10 educators who had received some training for the common core said that was the way it had been given.
"Due to resources, professional development is still the drive-by" variety in most districts, said the AFT's Ms. Dickinson.
More typically, professional development was provided through seminars, lectures or conferences, or collaborative planning time with colleagues.
The most frequent providers of that training are staff members from the teachers' schools or district central offices. One-third reported getting it from outside professionals; one-quarter received it from the state department of education; and 15 percent got it from a professional association.
What teachers really need, Ms. Dickinson said, is time to collaborate during the school day, when they can "really unpack the standards and look at lessons and understand what it looks like for student learning.
"Teachers need time to collaborate [not only] within their grade, but across grades," she said, "so they can understand the progression of the standards, what's come before, and where they're going. This is very complex work, and the time is just not built in for them."
Funding and capacity problems complicate the provision of good-quality professional development, said Ms. Britt. Without a "strong, clear vision and support" for ongoing, consultative professional development, teachers get quick-hit sessions that don't really build their collective capacity to improve instruction, she said.
"That's pretty much in line with what teachers have been getting in previous years," said Ms. Britt. "But the common core compounds the problem because there's a sense of urgency. [The common assessments] are coming [in 2014-15], so people are really scrambling."
Schools, Districts, States
In addition to being asked about their own sense of preparedness for the common standards, educators answering the EPE Research Center survey were also asked to size up the readiness of their schools, districts, and states for the new standards. On the whole, they had more confidence in their own readiness than in that of the systems in which they function.
Fewer than one-third said their schools were well prepared or very well prepared for the standards, and more than two-thirds said their schools were not well prepared. Confidence dropped as the locus of authority moved even further from the classroom: Only 27 percent of the educators said their districts were up to the task, and only two in 10 said their states were.
Turning their eyes to their own students, teachers showed grave concerns about the children's prospects for mastering the standards.
Asked to rate how well prepared their students are for that task on the 1-to-5 scale, with 5 being very prepared, only 23 percent of the educators gave the students 4's or 5's. Thirty-seven percent gave them 1's and 2's, and one-third gave them 3's.
Teachers gave a mix of responses when asked about the standards' quality and their potential to improve their practice. About 37 percent said the common standards are about as good as their own states' previous standards, and 41 percent said the common standards were better. But even with that mixture of views, two-thirds said they thought the new standards would improve their teaching.
The EPE Research Center's survey of educators' views on the common core was funded by the Hewlett Foundation.
Vol. 32, Issue 22, Pages 1,12