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Integrating Comparative Statistics

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By Lowell L. Kalapa

If you ever took a course in statistics, you know there are many ways statistics can be used to make the case for a particular position or stand. Unfortunately, unscrupulous use of statistics can lead the masses to a conclusion that is incorrect or misleading.
For example, people like to talk about increases in some sort of statistic like how much spending has grown or not grown for a particular program by comparison to another program. These comparisons usually take the form of percentages. One might read that spending on this program grew by only 5% whereas spending on this program grew by 100%. Beware of such comparisons because they are percentages and not necessarily absolute amounts. For example, a program which is touted as having grown 100% could have in absolute dollars gone from $1 to $2 whereas the program which only grew by 5% could have gone from $100 to $105.
Another trap in doing comparative statistics is that sometimes those numbers could be comparing apples to oranges. For example, one local statistician recently published an analysis of data collected by the U.S. Census department. In his analysis he pointed out the striking “fact” that Hawaii spent substantially less on education that many other states. And indeed if one looked at the numbers, it would appear that only about 17% of general government expenditures in Hawaii went for education. The “aha!” was to prove what we knew all the time, that Hawaii doesn’t spend very much on education.
However, when it was pointed out that the data reported by Hawaii for education includes only program expenditures including teachers’ salaries but not things like fringe benefits such as retirement and health care premiums, one had to take a second look at the comparative number.
Because all premium payments for health care benefits and contributions to the public employees retirement system are made through the department of budget and finance in Hawaii, those costs do not show up under the education category. On the other hand, because schools on the mainland are usually their own governmental units or entities, they report all costs incurred by the school district including health care premiums and contributions to the teachers’ retirement system or plan.
A few years ago, the head of the department of budget & finance took the time to reallocate these fringe benefit costs to each respective program or department of state government. Low and behold, instead of accounting for only 17% of general expenditures, education costs accounted for more than twice as much or about 34% of the general fund spending pie.
When higher education was added to what was spent on lower education and the libraries, “education” as a whole accounted for over 51% of the general fund expenditure picture. Again, this is because the way the state of Hawaii accounts for things like employee benefits and maintenance of facilities is different from the way it is reported by mainland jurisdictions.
Another example would be the construction and maintenance of school facilities which is the responsibility of the department of accounting and general services (DAGS). Since DAGS is sort of the catch all agency for things like building maintenance, purchase and maintenance of state vehicles or motor pool, these costs are not allocated by program. So the cost of an educational specialist using a state vehicle to visit four or five schools during the week is not allocated to the department of education but is accounted for under the DAGS budget.
So when it is time to fill out those survey forms for people at the U.S. Census, these costs are reported as general government services and not allocated to the program which utilizes the service or equipment. As a result, Hawaii ranks among the highest in expenditures for what is called general government or control and way below average for the all important public education category.
The other misleading comparison is measuring pay rates for public employees against other states in absolute dollars. While many of us complain about the high cost of living in Hawaii, what employees earned should be measured against what others earn in the same environment or community. Comparing absolute dollar wages across state lines is a very misleading comparison.
The point of the matter is that care should be exercised in using statistical comparisons across state lines where incomes and expenses and how those numbers are reported may vary widely.

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