February 10, 2012 Capitol-ism

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South Dakota Chamber Of Commerce - Capitol-ism E-Newsletter

February 10, 2012

Business and Education
Could Private Sector Salary Systems Benefit Schools?

HB 1234 - Provide rewards for the best teachers and those teaching in math and science subject areas, to revise certain provisions, regarding evaluation of teachers, to create a system for evaluating principals, to distinguish between tenured and non-tenured teachers, to revise certain provisions regarding the employment of teachers, and to repeal provisions regarding the teacher compensation assistance program.

Looking at the title, one wonders if it's longer than the bill itself. Have no fear, the bill is 22 pages long.

The sections of this bill that are of most interest to the South Dakota Chamber of Commerce and Industry involve these questions:

     - How do schools recruit people to positions that have been hard to fill?
     - Is the shortage of math and science teachers more urgent that shortages in other areas?
     - Can bonuses for teachers have an impact on retaining and motivating the best teachers?
     - Do bonus programs heighten competition to the detriment of cooperation?

These are the key questions being sorted out as the legislature examines Governor Daugaard's proposal. The Governor's initial proposal offered to pay math and science teachers an extra $3,500 and to establish a bonus program that would pay $5,000 for "the top" teachers.

The bill was extensively amended to allow districts more flexibility in "market pay" for districts with staffing shortages in areas other than math and science. These changes will not be detailed here as they did not affect why the Chamber spoke out for the bill.

The South Dakota Chamber of Commerce and Industry offered testimony to assure legislators that market differential pay and bonuses work in the private sector and could work for education as well. The Chamber's statement made no claim of expertise about how the policies would be implemented in schools. The goal was to share the experiences of many private businesses that have used these or similar salary policies to solve problems filling specific positions and motivating their best workers.

One might ask, "Why in the heck would the Chamber get into that issue?" Not to be glib (an odd assertion given the history of this publication), but the answer is . . . because it is important. Schools prepare young people to be contributing citizens and to enter the workforce. Students of today are workers (and business owners and legislators) of tomorrow.

Discussions with the Governor's staff pointed out that he has received significant support from business people when addressing groups throughout the state; however, when he returns to the Capitol, there is no one expressing that support. That makes sense since business lobbying efforts are focused on the issues most urgent to each industry. Put yourself in the Governor's shoes. There is nothing like having friends say that they are "right behind you", only to discover that "behind" has them in another time zone.

The Chamber is one of a few organizations that addresses general issues impacting business indirectly. As an advocate for a pro-business atmosphere, the Chamber's board of directors agreed that the Governor's proposals should have support in the legislative process. Governor Daugaard has established a vision for education and the Chamber supports that vision, while acknowledging that leaders in education must decide the best way to apply new ideas.

To put it mildly, many in the education community have been reluctant to embrace the Governor's proposals - like a cat in a bath. Critics have asserted that applying these salary policies in schools will have challenges. These concerns include:
- Lack of training among superintendents and principals to do evaluations of this nature.
- Research that raises doubt about any link between bonus pay and student advancement (former Secretary of Education Rick Melmer testified that the research is mixed).
- Making teaching more competitive and less collaborative.
- Rejection of the nothing that some teachers have less impact on student's lives than others.

It is important to note that many of these challenges speak to the difficulties of implementation, but don't establish with certainty that favorable results cannot be achieved. The Chamber would encourage educators to look at what it would take to secure the gains through the market differential pay and bonus structures.

HB 1213 - An act to revise certain provisions regarding liability for torts and product identification requirements.

South Dakota has achieved a carefully balanced set of laws regarding civil lawsuits. This statement should not be read to mean that everyone loves our laws about who can sue whom. There is enough of a sense of fairness that proposals to change the rules about liability actions are approached with suitable hesitation. It is the same as visiting a friend's home right as their baby has finally fallen asleep and hearing "Glad you are here, please come in, if you wake up the baby, you take him home with you."

HB 1213 will protect manufacturers from lawsuits that might be filed against them because a third party manufacturer makes a product that causes harm. Confused? You can read that sentence again but we suspect it won't help. The concept is simply too strange to be easy. Here is an example that might help.

Imagine that you invented a new-fangled hammer (it's easy if you try . . . hey, come back!). You get your patent and proceed to happily make and sell hammers. Then, your patent runs out and someone else "reverse engineers" your handy hammer and sells them in competition with you. Imagine that one of the knock-off hammers breaks and smashes someone in the face. Now we arrive at the point. There is a growing trend of people attempting to sue you because you invented the hammer and have a substantial market share, which means you might have a lot of money.

The best real life example is the pharmaceutical industry. When drugs no longer have the legal protection of patents, they can be produced as generics. Someone might goof up making the generic and instead of curing a stomachache, the pill causes a horrid rash on everyone's face, which only makes the stomachache worse. A number of attempts have been made to sue the original producer of the drug. Sound crazy? HB 1213 will make sure it lives in legend, not in South Dakota law.

Here is the key paragraph of this law:

In any civil action against a manufacturer for harm caused by a product, irrespective of any substantive theory underlying the claim, a manufacturer is not liable if the claimant fails to prove by a preponderance of the evidence that the defendant was the manufacturer of the actual product that was the cause of harm for which the claimant seeks to recover compensatory damages. Proof that a product seller designed, formulated, produced, constructed, created, assembled, or rebuilt the type of product in question is not proof that the product seller designed, formulated, produced, constructed, created, assembled, or rebuilt the actual product at issue in the action. No product seller may be held liable based on market share, enterprise, or industry-wide liability in any action brought for or on account of harm caused by a product.

Gee, that sentence is looking better. HB 1213 passed Senate State Affairs unanimously.

SB 180 - Proposing and submitting to the electors at the next general election a new section to Article VI of the Constitution of the State of South Dakota, relating to the distinction between the rights of natural persons and artificial entities.

Are Corporations People? Put another way, is your business entitled to the protections found in the Constitution's statement of rights? As a corporation, do you have a right to free speech, protection from seizure of property, or having your business license taken away without any due process?

There is a national debate about whether or not corporations should be considered "persons". (Any grade school teachers might give you a raised eyebrow at the use of "persons", but this is the Constitution after all and sometimes lofty concepts ain't good English.)

The idea that commercial entities have the same rights (and responsibilities) as people is so pervasive in South Dakota law that the word "business" rarely appears. Statutes most often use the word "person" in dealing with business laws such as taxes. There is anger at the recession and the distribution of wealth throughout the country. There is anger and skepticism at those in power. Add to this the US Supreme Court decision know as "Citizens United", which is allowing corporations (and unions, a fact that is often ignored in coverage) to use their corporate money to fund independent speech that addresses candidates directly.

It should be noted that corporations are NOT allowed to give directly to candidates, but they can talk about them in direct speech and advertising that will then be reviewed all day by political shows on 24-hour television. But we digress.

SB180 was tabled at the request of the sponsors. In the rush of the initial weeks of session, this bill was drafted as a regular bill, not as a Joint Resolution which is required for a constitutional amendment. Setting the consequences of drafting aside, there is a stark statement being made by several legislative leaders. It might be tempting to think that the whole "occupy Wall Street/Main Street/back alley" movement is a remote event being conducted by someone else's failed children but it would also be a mistake. Here is the language of this proposal:

ยง 29. The rights protected by the Bill of Rights of the Constitution of the State of South Dakota are the rights of natural persons and do not extend to corporations, limited liability companies, or other artificial entities established for business purposes or to promote business interests under the laws of this state. Such corporate and other artificial entities established under law are subject to regulation by the people through the legislative process. Such corporate and other artificial entities are specifically prohibited from making contributions or expenditures in any election of any candidate for public office or the vote upon any ballot measure submitted to the people.

Look at that key phrase again (Capitol-ism's version of a Policy Wonk instant replay).

The rights protected by the Bill of Rights of the Constitution of the State of South Dakota are the rights of natural persons and do not extend to corporations, limited liability companies, or other artificial entities established for business purposes or to promote business interests under the laws of this state (emphasis added).

Just to keep you up at night, here is the table of contents for the South Dakota Constitution's Bill of Rights, the rights that would no longer apply to your business, unless the legislature said they did.


BILL OF RIGHTS (emphasis added)

1. Inherent rights.
2. Due process - Right to work.
3. Freedom of religion - Support of religion prohibited.
4. Right of petition and peaceable assembly.
5. Freedom of speech - Truth as defense - Jury trial.
6. Jury trial - Reduced jury - three-fourths vote.
7. Rights of accused.
8. Right to bail - Habeas corpus.
9. Self-incrimination - Double jeopardy.
10. Indictment or information - Modification or abolishment of grand jury.
11. Search and seizure.
12. Ex post facto laws - Impairment of contract obligations - Privilege or immunity.
13. Private property not taken without just compensation - Benefit to owner - Fee in highways.
14. Resident aliens' property rights.
15. Imprisonment for debt.
16. Military subordinate to civil power - Quartering of soldiers.
17. Taxation without consent - Uniformity.
18. Equal privileges or immunities.
19. Free and equal elections - Right of suffrage - Soldier voting.
20. Courts open - Remedy for injury.
21. Suspension of laws prohibited.
22. Attainder by Legislature prohibited.
23. Excessive bail or fines - Cruel punishments.
24. Right to bear arms.
25. Treason.
26. Power inherent in people - Alteration in form of government - Inseparable part of Union.
27. Maintenance of free government - Fundamental principles.
28. Right to vote by secret ballot.

It should be pointed out that corporations do not have the right to vote, but losing protection from search and seizure would be enough to trigger a real seizure. SB 180 was lost on a technicality but it most likely would have lost a vote of the legislature. During the next election cycle, it might be good to sound out candidates in your districts about your business rights.

Business Day at the Legislature and Annual Meeting
Thursday, February 23, 2012

For thirty-six years, Business Day has brought local business representatives and community leaders to Pierre to participate in State Chamber meetings and events and to view the legislative process at the Capitol. The evening reception and banquet provide time with your local legislators to discuss specific issues of importance or concern.

Here is the agenda and a link taking you directly to the registration page.

9:00 AM - Registration Opens
11 AM - Legislative Update with State Chamber President David Owen
12:15 PM - Business Day Luncheon with guest speaker Peter Pellerito, discussing the biotechnology industry
12:15 PM - Business Day Young Professionals Luncheon with guest legislative speakers discussing public service involvement
1:30 PM - Business Caucus program with guest emcee - Audience participation session on current legislative topics and issues of statewide importance
2:45 PM - Spend time at the Capitol viewing the legislative process
5:30 PM - Economic Developer's Reception and Manufacturer's Showcase
6:30 PM - Business Day Banquet with keynote address by motivational speaker and former Montana Governor Judy Martz

Business Day Registration

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