A Point of Honor – “I will not lie, cheat, steal or tolerate those who do”

When I was in high school way back in 1984, a group of students in a lower grade conspired to cheat through the entire school year. They were finally found out and suffered . . . surprisingly not much. Normally, cheaters were publically chastised and expelled posthaste at my high school. How did this group of students survive to eventually graduate at the top of their class?

They were honor roll students and even though it was a private Christian high school with a strict honor code, demerit system and the necessary spiritual leverage to dangle the Keys of the Kingdom just out of reach of an erring student, the school administration went soft on the punishment. Maybe the administration was ahead of its time by claiming that conspiring is really just collaboration or maybe they just did not want to alienate future donors. Regardless, nothing in this experience was out of the ordinary. Some students will always cheat and if allowed to go unpunished, their example will pull more students into academic dishonesty. This all happens under the noses of weak administration.

Back in the Age of Common Sense, people understood the idiom “one bad apple spoils the whole barrel.” Now we must have the data to prove it. So, consider the 2010 study Imitation Is The Sincerest Form of Cheating: The Influence of Direct Knowledge and Attitudes on Academic Dishonesty by Jillian O’Rourke, etal. They concluded that a small percentage of students cheat regardless of moral training at home or threat of punishment at school. They proved the “bad apple” part of our old fashioned idiom.

The study went on to prove the “spoils the whole barrel” part. Students who see other students cheat will themselves cheat even if they were taught at home that cheating was unethical. What then overcomes the moral teachings of home?

One explanation can be found in social learning theory as posited by Albert Bandura, the Professor Emeritus of Social Science in Psychology at Stanford University. He says (in my simple-minded interpretation) that learning happens not just through behavioral changes but also by observation.

Applying Bandura’s assertion, if a student who states an ethical aversion to cheating sees another student cheat successfully enough times, the reluctant student will cheat also. At that point, the reluctant student has been socialized to cheat. Carrying this logic forward, if school authorities allow an atmosphere of cheating to exist, then more students will be drawn into it.

Consider Act 195 passed by our Legislature earlier this year defining the Profile of the South Carolina Graduate. This bill requires that “Students finally also must be offered reasonable exposure, examples, and information on the state’s vision of life and career characteristics such as: Integrity, Self Direction, Global Perspective, Perseverance, Work Ethic, and Interpersonal Skills.”

Though some may brush these words off as politically driven pabulum for the electorate, the increasing number of students who enter school with no ethical or moral instruction from home and who view academic dishonesty as just “getting ahead” suggests that South Carolina schools must first focus on developing integrity.

Statistics reported by the International Center for Academic Integrity support the direction that Act 195 has mapped out. The ICAI reports that surveys of “70,000 high school students at over 24 high schools in the United States demonstrated that 64 percent of students admitted to cheating on a test, 58 percent admitted to plagiarism and 95 percent said they participated in some form of cheating, whether it was on a test, plagiarism or copying homework.” Clearly, we are not instilling academic integrity into our high school students. Since South Carolina has codified that our high school graduates should learn integrity, we should give schools the tools to carry out that vision.

Schools traditionally used honor code systems to socialize academic integrity. Honor codes are very simple pledges based on personal honesty and responsibility. To achieve an atmosphere of academic honesty, the student must proactively agree to be bound by the honor code, the code must be visibly upheld by the faculty as a positive force and violations of the code must be openly punished as appropriate. When this atmosphere has been created, academic dishonesty decreases. This was found true in the 1993 study, Academic Dishonesty: Honor Codes and Other Contextual Influences by Donald McCabe, etal.

Not everyone agrees. Susan H. Greenburg, writing in The Washington Post last year about eliminating honor codes remarked, “In an age in which collaboration and interpersonal skills are increasingly valued in the workplace, honor codes that rigidly define and punish ‘cheating’ in classrooms have become impractical and antiquated.”

She then repeats her argument, “In our modern world, when every known fact is readily accessible on the Internet, students are increasingly encouraged to collaborate on projects and share knowledge that inspires creative problem-solving. That kind of teamwork is valued in the working world but is undermined by outdated honor codes.”

Since she repeats herself, I am going to briefly pick at her argument with a few random rebuttals. Collaboration, teamwork and creative problem solving are not ideals mutually exclusive from integrity, the core ideal of the honor code. Stealing someone’s idea at work and presenting it as your own will not win you friends and most likely will cost you a job. Lying and stealing are much less tolerated at work than at school. Since Ms. Greenburg identified herself as the author of her article, I suspect that she would not appreciate another writer plagiarizing her work for use at another newspaper.

“So what? Students have always cheated and always will. It’s harmless” some may say. They fail to understand the source of the ethical drift that has eroded the overall national trust that Americans used to take for granted. Trust in the core purpose of our government, in our financial system, in our corporate leaders, in a shared work ethic, and in our educational system. At some point, Americans bought the 20th century notion that ethics could just be taught at home. That would be enough and schools could teach the three “R’s” in an ethical neutral zone free of the harsh expectation of individual responsibility. We were wrong.

When we look at our country, especially during this election season, and wonder how did we come to this, we should remember that integrity enables trust, which is the only true currency of a free society. A lack of integrity destroys trust and enables a corrupt society, a fearful society and eventually, an enslaved society. We have one legislative remedy to halt our ethical drift. We simply must remake our educational system into one that insists on honorable and ethical behavior from our students.

Take the honor code quiz by matching the honor code to the school –

___        Harvard

___        Washington & Lee

___        Greer Charter Middle College

___        The Citadel

___        Greenville High Academy

___        Clemson College of Engineering

___        SC Governor’s School for Science & Mathematics

___        United States Air Force Academy

  1. A cadet does not lie, cheat, or steal, nor tolerate those who do.
  2. Members of the ________ community commit themselves to producing academic work of integrity – that is, work that adheres to the scholarly and intellectual standards of accurate attribution of sources, appropriate collection and use of data, and transparent acknowledgement of the contribution of others to their ideas, discoveries, interpretations, and conclusions. Cheating on exams or problem sets, plagiarizing or misrepresenting the ideas or language of someone else as one’s own, falsifying data, or any other instance of academic dishonesty violates the standards of our community, as well as the standards of the wider world of learning and affairs.
  3. Engineers, both students and professionals, must be of honorable and trustworthy character. It is dishonest to claim credit for work, which is not the result of one’s own efforts.
  4. I will strive to achieve excellence, support and take pride in all areas of my school, be honest in my actions and words, lead my fellow classmates by responsible example with a mature and positive attitude. I will not lie to a faculty member, cheat, or steal.
  5. Every student must be a gentlemen.
  6. We will not lie, steal or cheat, nor tolerate anyone among us who does. Furthermore, I resolve to do my duty, and to live honorably (so help me God).
  7. As members of the ____ community, we share a commitment to honor and integrity. We value those things that are right and decent; we reject any behavior that fails to meet those standards. Therefore, any act of academic dishonesty will not be tolerated.
  8. I will not commit any act of lying, cheating, stealing, academic dishonesty, vandalism, illegal intervisitation, or action in violation of South Carolina or federal law (such as possession or use of alcohol or other drugs). If I witness a violation of the honor code, I am encouraged to report the violation to a member of the administration, faculty, or staff and express either a willingness to go before the administration, Judicial Council, or Honor Council as a witness, or a desire for confidentiality.

See Below for Answer Key
















South Carolina’s State Pension System – Playing The Blame Game

I was asked recently who was to blame for the rising unfunded liability in our state retirement system. Pension plans are complex and assigning blame assumes a simple cause where none exists.

Many factors are used to determine the future value of a lifetime payout for a state retiree. Certain assumptions are made such as the assumed annual rate of return that an employee should expect during his participation in the plan and the employee’s life expectancy.

The assumptions are used in a formula to determine “what should be.” This should be amount is compared to “what has happened” – i.e. the actual amount of contributions that have been paid into the plan and the real annual rate of return. The difference is the unfunded liability.

What caused our unfunded liability to increase 30% over the last 20 years? Federal mishandling of the economy and a series of reactive decisions made by the Legislature, the voters and the state plan fiduciaries overseeing the pension plan. These decisions involved the plan investments and the contribution rates for employees and employers.

The investment decisions by our pension plan managers were a defense to decisions made in Washington during the 1990’s. During that decade, Congress passed several acts that deregulated our banking system. Banks were allowed to merge with other banks across state lines. They were allowed to expand their services beyond loans and savings accounts. We ended up with large banks providing all types of commercial, investment and insurance services nationwide. Then the economy start expanding again and the Federal Reserve played around with interest rates more than normal to control growth.

The Fed’s interest rate manipulation cracked the foundation of fundamental pension investment strategy – a strategy that historically depended upon a viable fixed rate of return from conservative investments. Simply put, the lower rate earned from bonds and cash accounts forced pension investors to take greater risks in stock investments to meet the plan’s assumed rate of return. Increased risk meant increased investment fees.

In reaction to the lack of return from fixed investments – investments that our pension assets were constitutionally required to be invested in, our Legislature put a constitutional referendum on the November 1996 ballot that allowed our state pension funds to be slowly invested in stocks (equities). The referendum passed and from 1997 to 2008 the percentage of total pension plan assets invested in equities increased dramatically as the stock market became increasingly volatile. Let’s just say that our timing was about as good as most individuals who invested in the market during those years.

In the years since the 2008 market crash and bank failures, the Federal Reserve has held interest rates at almost zero. Their decision has accelerated the unfunded liability crisis in pension plans across the country. Whether the plans have been corporate or governmental, almost all of them have been negatively impacted. South Carolina is one of thirty-five states addressing unfunded liability problems. The other fifteen states were just lucky, like your contrarian neighbor who always seems to win in a down market.

The other series of decisions were the annual ad hoc cost of living adjustments (COLAs) granted to retirees to counteract inflation. Generally, they ranged from 1% to 2% each year but were not specifically funded. These decisions added to the unfunded liability, but on a smaller scale than the investment decisions. Ad hoc COLAs were stopped in 2008.

During our first meeting of the Joint Committee on Pension Systems Review, someone asked how we had gotten to this point. The consensus of the committee was that our purpose was not to assign blame. Personally, I do not believe that any voter, legislator, investment manager, state employee group, state retiree group or lobbyist intended to harm the state pension plan. I do believe that most did not understand the complexity of what they faced or the ramifications of their decisions.

However, I do hold the Federal Reserve and our Congress responsible for meddling in a market economy that they do not understand and cannot possibly control for any length of time. Their interest rate manipulations have turned this country into a nation of debtors and has all but killed the incentive to save money. They have put a trillion dollars of pension benefits at risk with no solution but the doubtful hint of a government bailout. That’s who I blame.

Argus, Ric Flair And The Looming State Pension Debt

As our first meeting of the Joint Committee on Pension Systems Review drifted into the fourth hour, I watched several eyelids in the audience begin to droop. Given the complexity of the subject matter, I was surprised that they were alert for that long.

The audience shouldn’t be held responsible for their somnolence. Having worked in the pension compliance business since I was a graduate student at Clemson, I can attest that discussing the finer points of pension funding would put even Argus to sleep.

Remember Argus? Not Argus Filch from Harry Potter lore but Argus the giant from Greek mythology. He had 100 eyes that never slept and was made to watch over a sacred cow. And no, he wasn’t a Clemson graduate. And don’t confuse him with Hypnos, who personified sleep or Magneto who . . . well, he wasn’t a Greek god; he was an X-Men nemesis. Anyway, each generation has its superheroes. The ancient Greeks and the Millennials have theirs. My generation had Ric Flair and Dusty Rhodes but I don’t see either one hanging around to explain the need for our review committee or the severity of South Carolina’s pension funding problem. So, I will try.

The 2008 market crash accelerated funding shortfalls in governmental pension plans nationwide including the five plans that make up South Carolina Retirement Systems (SCRS). Before the crash, unfunded liabilities of governmental pension plans were off the political radar. After the crash and ensuing recession, unfunded liabilities grew exponentially.

In response, the Governmental Accounting Standards Board adopted new pension reporting standards in 2012 that require state and local governments to report their total pension liability, the fair value of plan assets available to pay pension benefits and their net pension liability. This may seem rudimentary to anyone who has balanced a bank statement, but it takes a crisis to bring clarity to governmental accounting.

The new standards highlighted a serious downward trend in South Carolina’s pension liability. According to SCRS Comprehensive Annual Financial Report for June 30, 2015, we have promised $50.7 billion in retirement benefits to over 550,000 government employees who participate in those plans. We had $29.3 billion in assets on hand. Which means our net pension liability was $21.4 billion.

More simply stated, our system at that time was 57.85% funded. As a reference point, the system was 88.5% funded in 1997. We have experienced a 30% funding decline over the last twenty years. The 2016 report is due before the end of this year but don’t expect much improvement.

Before anyone panics and jumps off of the Statehouse Dome, rest assured that we don’t owe all of the money at once. We have a window of opportunity afforded by the creation of the Joint Committee to stop the downward spiral. We can restore financial soundness to the system if we avoid a few political pitfalls.

State pension plans are political sacred cows and having attended the 2012 pension reform meetings, I recall several Argus-like groups ever watchful that their accrued benefits, contribution rates and cost of living adjustments were protected. They were prudent to do so. Pension benefits are just one part of a governmental employee’s compensation package and accrued benefits are a promise to pay that must be protected. Future contribution rates and cost of living adjustments are not as sacred.

State pension plans are the victims of political schizophrenia. Many variables make up the pension funding formula and each has contributed to our current problem in some way. However, two variables are fundamental to ensuring the long-term self-sufficiency of a pension plan: an annually increasing payroll and an expanding workforce. Here’s where the break with reality occurs. These two variables conflict with political promises to limit government growth and reduce spending.

How then does a small government majority party work with a big government minority party to restore the financial foundation of the plan? Hopefully, with the objectivity that this problem demands and leave the political posturing aside.

We should start with a frank discussion about the future of the plans within SCRS. Are pension plans, which were 19th century creations, still appropriate retirement vehicles for our 21st century mobile workforce? To achieve a self-sufficient plan in the long term, are we willing to expand our governmental workforce or pay them more?

After those questions has been answered, the committee members will need some backbone to issue a report back to the General Assembly that contains a viable solution. The solution will require a hard-bargained compromise on future employee benefits, a long-term strategy that controls every variable of the funding formula, the political will to execute the strategy and the institutional discipline to monitor the strategy over a prolonged period – maybe as long as twenty years.

Political will? Compromise? Institutional discipline? Long-term strategy? Do these virtues still exist in the General Assembly? They must simply because the debt is not some ancient Greek myth. Make no mistake. The dollars owed are as real as the South Carolinians to whom they belong.

Tommy Stringer