Tax Slashing Predictably Reduces Government’s Capacity to Do Its Job

Commenting for the NY Times yesterday on the tax reform bill being rushed through Congress, Peter Goodman and Patricia Cohen explain: “The tax plan has been marketed by President Trump and Republican leaders as a straightforward if enormous rebate for the masses, a $1.5 trillion package of cuts to spur hiring and economic growth. But as the bill has been rushed through Congress with scant debate, its far broader ramifications have come into focus, revealing a catchall legislative creation that could reshape major areas of American life, from education to health care.”

This warning about the persistent effort to reduce government should frighten those of us who worry about government’s capacity to educate the 50 million children and adolescents who fill public schools across our states. Perhaps you are taking comfort in the fact that fiscal responsibility for schools is shared by local, state, and federal governments, but it isn’t really that simple. What happens at the top—the federal level—or at the middle level, in your state—or in your local school district’s passage or failure of your most recent school levy is tightly woven together with the funding at other levels. On Wednesday, the Center on Budget and Policy Priorities released A Punishing Decade for School Funding, the latest in its annual bird’s eye surveys of what is being spent across the United States on K-12 public education.  This latest report comes a decade after the Great Recession caused tax collections to collapse across many states. The report examines whether and to what degree states and their public schools have been able to recover.

The Center on Budget and Policy Priorities (CBPP) emphasizes the essential concept of interconnectedness. Public education is primarily a state function; schools are established by the 50 state constitutions, not the federal constitution. Forty-seven percent of money for public schools is provided through taxation by state governments; 45 percent of school funding comes from local school taxes; and only 8 percent is currently provided by the federal government. The number of students enrolled has grown in the decade when the Great Recession hit in 2008: “(W)hile the number of public K-12 teachers and other school workers has fallen by 135,000 since 2008, the number of students has risen by 1,419,000.”

So… what has happened to cause the number of teachers to fall even as the number of students has risen?  “When the Great Recession hit… property values fell sharply, making it hard for school districts to raise local property taxes—schools’ primary local funding source—without raising rates, which is politically challenging even in good times. Raising rates was particularly difficult during a severe recession with steep declines in housing values in many areas.  As a result, local funding for schools fell after the recession took hold, exacerbating the even steeper fall in state funding.”

State funding has not caught up (when adjusted for inflation): “In 29 states, total state funding per student was lower in the 2015 school year (the most recent year for which data is available) than in the 2008 school year, before the recession took hold.  In 17 states, the cut was 10 percent or more.  In 19 states, local funding per student fell over the same period. In the other 29 states for which we have data local funding rose, but those increases usually did not make up for cuts in state support. In 29 states, total state and local funding combined fell between the 2008 and 2015 school years.”

And even before we learn what will happen with the current tax-reform bill being considered by Congress this week, we learn from CPBB that, “Federal policy makers have cut ongoing federal funding for states and localities—outside of Medicaid—in recent years, thereby worsening state fiscal conditions. The part of the federal budget that includes most forms of funding for states and localities… known as non-defense ‘discretionary’ funding (that is, funding that is annually appropriated by Congress), is near record lows as a share of the economy. Federal spending for Title I—the major federal assistance program for high-poverty schools—is down 6.2 percent since 2008, after adjusting for inflation.”

Authors of CBPP’s new report cite peer-reviewed research by C. Kirabo Jackson, Rucker Johnson and Claudia Persico, scholars at Northwestern University and the University of California at Berkeley, who tracked the long-term impact on children of their school district’s funding level: “As common sense suggests—and academic research confirms—money matters for educational outcomes. For instance, poor children who attend better-funded schools are more likely to complete high school and have higher earnings and lower poverty rates in adulthood.” Here are the learning essentials the CBPP report attributes to adequate school funding: recruiting, developing, and retaining high-quality teachers; trimming class size; and expanding learning time. Nothing fancy here: These are basic but very expensive fundamentals.

Why has spending on K-12 public education in many places never caught up to where it was in 2007?  The CBPP reports: “States disproportionately relied on spending cuts to close their large budget shortfalls after the recession hit, rather than a more balanced mix of spending cuts and revenue increases… State revenues have been hurt this year and last by a variety of factors, including falling oil prices, delayed sales of capital, and sluggish sales tax growth.”

Finally and not surprisingly, “Some states cut taxes deeply. Not only did many states avoid raising new revenue after the recession hit, but some enacted large tax cuts, further reducing revenues. Seven of the 12 states with the biggest cuts in general school funding since 2008—Arizona, Idaho, Kansas, Michigan, Mississippi, North Carolina, and Oklahoma—have also cut income tax rates in recent years.”

Austerity government and tax slashing—the reality in too many states in recent years—ought to serve as a warning to us all as Congress considers big reductions in federal taxes. There will inevitably be serious consequences for people who depend on government for things like healthcare and education.

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Budget Expert, Robert Greenstein Explores Trump’s Heartless Budget in Cleveland City Club Address

Robert Greenstein, the President of the Washington, D.C., Center on Budget and Policy Priorities, addressed the Cleveland City Club last Friday. Greenstein’s subject was President Trump’s proposed budget and what it will mean for real people. Although Greenstein did not specifically address the federal education budget, what he said has profound and tragic implications for the future of public education as well as for health and social services. I urge you to watch the video or listen to the podcast or read Greenstein’s remarks.

President Trump’s budget, explains Greenstein, is a “topic that should be of grave concern to our nation, the state of Ohio, and the city of Cleveland… The Trump budget is different from any that I’ve seen from any President of either party in the 45 years I’ve been working on these issues… First, it is surprisingly unprofessional. President Trump has outlined a very large tax cut that he says will be one of the biggest tax cuts in U.S. history. Yet his budget makes a series of assumptions that few analysts find credible—such as assumptions of soaring economic growth year after year…. The budget also proposes to repeal the federal estate tax but then continues to count the revenue from it as though the tax would remain in place. And second, the budget proposes the most aggressive, Robin-Hood-in-Reverse, budget and tax policies that any modern President has ever proposed.”

Contrary to what we may have been reading in the paper, Greenstein worries that Congress may actually pass a budget like Trump’s proposal: “Now, you may have heard it said that the Trump budget is dead on arrival in Congress. Please don’t believe it. The Trump budget is, in large part, an exaggerated version of the budget plans that the very conservative House Republican majority has advanced every year since 2011, as well as of the last budget plan that the House and Senate jointly adopted, in 2015. Every one of those budgets would have deeply cut programs for Americans of limited means, deeply cut non-defense discretionary programs, shifted costs to states and localities, and provided substantial tax cuts for those at the top. None of those budgets made their way into law because Barack Obama was president. But now, the White House, House, and Senate are controlled by the same party, and they all have the same general idea about budget cuts and tax cuts.”

The first way Greenstein’s remarks speak to the future of our nation’s public schools is his discussion of the Robin-Hood-In-Reverse budget priorities that will take from the poor and near-poor and reward the rich through massive tax cuts. It has been well established that children’s school achievement is deeply affected by family and neighborhood poverty. Here is a reminder of that fact in a letter sent last year by the Vermont State Board of Education to then-Secretary of Education John King: “Fundamentally, if we are to close the achievement gap, it is imperative that we substantively address the underlying economic and social disparities that characterize our nation, our communities and our schools.  With two-thirds of the score variance attributable to outside of school factors, test score gaps measure the health of our society more than the quality of our schools.”  This blog has explored the effects of poverty on school achievement; see, for example, here, here, and here.

So what does Greenstein tell us about how the President’s proposed budget will affect poor families and children? The budget “proposes remarkably large tax cuts for those at the top and remarkably severe cuts in social programs for those who face hard times—cuts in one program after another for working-poor families, (and) disadvantaged children… which would push millions of Americans either into poverty or deeper into it. The budget is especially harsh on people who live paycheck to paycheck or otherwise struggle to get by…. The budget embraces the House-passed bill to ‘repeal and replace’ the Affordable Care Act, which the Congressional Budget Office estimates will cause 23 million more American to become uninsured… The budget also cuts nearly $200 billion over ten years from the food stamp program, both by cutting the program directly and by forcing states to pay about one-quarter of food stamp benefit costs…. (T)he Trump budget proposes to end the national food stamp benefit standards, which President Nixon and Congress established on a bipartisan basis after researchers in the late 1960s found rates of child malnutrition and nutrition-related diseases in parts of our country that were akin to the rates in some third-world countries. The Trump budget would turn back the clock.”

Greenstein continues: “In other areas, the budget would turn the clock back even further, to decades well before the 1960s. There’s a part of the federal budget known as non-defense-discretionary programs. This includes most of the federal spending for education, job training, scientific research, and transportation—important building blocks for a healthy economy in the future. It also includes funds for environmental protection, food safety, national parks, veterans’ health care, and a number of important programs to help low-and modest-income families, like low-income housing assistance, Head Start, and child care. This part of the budget has already been squeezed heavily in recent years. But the Trump budget would cut it so much more deeply that by 2017, total non-defense discretionary spending would be at its lowest level, as a share of the economy, since Herbert Hoover was president.”

In his remarks to the Cleveland City Club, Greenstein also addresses a second way that the new budget, if passed, will threaten public education. Again, the specific topic of public education is not a focus, but the implications are clear as Greenstein explains how the new budget, if passed, will dump the responsibility for paying for an enormous burden of previously federally funded programs onto states and localities. As readers of this blog are surely aware, the states take care of roughly half of education funding, with most of the rest paid for by local school districts. The federal government itself pays less than ten percent of K-12 education. Because education is the biggest line in many state budgets, it is among the only places (apart from or on top of massive state tax increases) where significant money could be found to pay for huge added costs for Medicaid and other added health care costs, food stamps, TANF, housing assistance and all the rest. And according to Greenstein, this federal budget bill is designed to demand that, as time passes, states must cover more and more of the costs previously paid for by the federal government.

For his Cleveland audience, Greenstein explains how shifting the cost of social and health programming would affect Ohio alone: “By the way, one-third of federal non-defense discretionary spending is for grants to state and local governments to help them deliver important services. The Trump budget cuts would hit Ohio and Cleveland hard. As just one of many examples, in 2018 alone, Ohio would lose $137 million in Community Development Block Grant funding….” “Ohio’s Medicaid expansion under the Affordable Care Act, which insures 700,000 people, would end.  On top of that, the (budget) bill cuts federal funding for Ohio’s entire Medicaid program, with the cuts growing larger with each passing year; this would place the state’s 3 million Medicaid enrollees, and Ohio’s health care providers, at risk.” The proposed shift of food stamp costs to Ohio’s budget would be $4 billion over ten years.

Just a week ago, Greenstein’s colleagues at the Center on Budget and Policy Priorities, Iris Lav and Michael Leachman, published a major report, The Trump Budget’s Massive Cuts to State and Local Services and Programs, which details what cuts to state and local governments will mean for the people who lose services unless states can find a way to compensate for federal cuts.

First there are entitlement programs (and this report calls food stamps by the acronym for its current name, Supplemental Nutritional Assistance Program. SNAP): “Entitlement (or mandatory) programs are ongoing; they continue as they are unless policymakers change them. The Trump budget would significantly change three entitlements—Medicaid, SNAP, and TANF—and eliminate a fourth, the Social Services Block Grant.”

Then there are programs that are funded each year when Congress appropriates the money for specific budget lines—the part of the budget called Non-Defense Discretionary Spending: “The total cut to discretionary grants for states and localities would amount to $28 billion in 2018 and grow to about $82 billion a year by 2027.”  Programs eliminated are Low Income Energy Assistance; HOME Investment Partnerships, Community Development Block Grant and Choice Neighborhoods; the Community Services Block Grant; and two education programs—the 21st Century Community Learning Center after-school programs, and Supporting Effective Instruction State Grants (30 percent of these funds are used for class-size reduction and the rest for teacher professional development).

Make no mistake.  Eliminating  all these programs and reducing the federal budget for a host of others will hurt vulnerable families and children. And the federal cuts, even to programs that are not directly related to public schools, will inevitably further reduce state expenditures on public education when states struggle try to rearrange the budget to help desperate people who need health and social services. Here are Lav and Leachman in last week’s report: “Some may argue that states could pay for and continue these programs, rather than have people suffer the consequences of losing assistance and opportunities. The President’s March budget blueprint (the earlier Skinny Budget) repeatedly comments that various programs should be transferred to the states, with no mention of additional resources to support the transfer. The reality, however, is that states lack the wherewithal to replace the magnitude of funds they would lose under the budget. States operate under balanced budget requirements, and most states are already struggling to balance their current budgets, even before any federal cost shifts. Recent state revenue growth has been weaker than expected, leaving 28 states with budget shortfalls this fiscal year… Most of these states have responded by cutting services, using reserves, and taking other steps to balance their budgets…. More than half the states lack the revenue needed to maintain services at existing levels in 2018.”

Robert Greenstein’s speech to the Cleveland City Club is a clear and easy way to become better informed about the outrageous heartlessness of the budget Trump and Congress are considering.  I urge you to watch the video or listen to the podcast or read Greenstein’s remarks.  Then be in touch with your U.S. Senators.

Public Schools “Flush with Cash”?

In his inaugural address, President Donald Trump declared that public schools are “flush with cash.” That phrase confirms something I’ve always suspected. President Trump has never been inside a public school.

The public schools I know generally have old fashioned waxed tile floors—work done by a custodian after the children leave at the end of the day.  The trash is emptied, and the cafeteria tables are set up for the free breakfast provided these days for hungry children who qualify. Then the tables are folded up and lined tight against the wall to allow the children to have gym class in the all-purpose room before lunch is set up. The stale aroma of fish sticks lingers through the afternoon gym classes and, if the school is in a bit wealthier community, into the band class that is also set up some days every week in the same all-purpose room.

“Flush with cash” describes the people crowding the sidewalk in front of Bergdorf’s on Fifth Avenue and the people in tailored overcoats we keep watching while they ride down the escalator in the gilded Trump Tower.  But referring to any public school as “flush with cash” is one of those falsehoods Kellyanne Conway has taken to calling “alternative facts.”

In his speech Trump trumpeted one of the classic anti-public school talking points of those who want to trash and privatize public schools—that although we are dumping tons of money into our schools, our schools haven’t moved the needle on test scores.

It’s true that overall on the one test that is trusted, the National Assessment of Education Progress (NAEP), scores have not risen astronomically. While the black-white test score gaps have narrowed, the huge gap in achievement among children whose family income is in the top ten percent and those in the bottom ten percent is now 40 percent wider than it was in 1970.  That is surely consistent with the real fact—documented in academic research—that children’s standardized test scores are affected in the aggregate by the wealth or poverty of their families and the economic conditions in their communities.

What about school spending?  Richard Rothstein studied this back in the 1990s in reports published by the Economic Policy Institute.  Here is what he explains in Where’s the Money Gone?, his report on school spending between 1967 and 1991: “(T)he share of expenditures going to regular education dropped from 80% to 59% between 1967 and 1991, while the share going to special education climbed from 4% to 17%.  Of the net new money spent on education in 1991, only 26% went to improve regular education, while about 38% went to special education for severely handicapped and learning-disabled children. Per pupil expenditures for regular education grew by only 28% during this quarter century—an average annual rate of about 1%.”

Rothstein later updated his study to cover the years from 1991-1996.  In Where’s the Money Going?, Rothstein documents that,”(R)eal per pupil spending across the nation was roughly stable over the 1991-96 period, growing by only 0.7% (or 0.14% on an average annual basis).  This was a significant slowdown from the growth in per pupil spending of 61% (0r 2.0% on an average annual basis) from 1967-1991.  In the most recent period, some districts have actually had to reduce regular per pupil education spending in response to the combined pressures of enrollment growth, inflation, and shifting priorities toward spending on special populations… The share of spending on regular education is shrinking. By the 1996 school year, regular education accounted for only 56.8% of all school spending, down from 58.5% in 1991.  Special education spending grew to 19.0% of all school spending in 1996, up from 17.8% in 1991.  School lunch and breakfast programs grew to 4.8% of total school spending in 1996, compared to 3.3% in 1991.  Bilingual education programs grew to 2.5% of total school spending in 1996, up from 1.9% in 1991. The shift of spending away from the regular education program continues a trend observed over the 1967-91 period. However, in an era of stagnant overall school spending, such as the 1990s, this shift has translated into an actual reduction in regular education spending per pupil in several school districts.”

These numbers, now 20 years old, reflect that after the Individuals with Disabilities Education Act passed in 1975, a significant percentage of school funding was used to create programs for children the schools had not previously served.  And as the number of English learners has grown, significant funding has shifted into programs to serve these students.

But what do more recent numbers tell us about trends in the funding of schools?  Last October, the Center on Budget and Policy Priorities (CBPP) updated its regular reporting on trends in state-by-state expenditures.  While federal funding for schools makes up only about 10 percent of all school finance, the states contribute over 40 percent, which means that trends in state funding significantly affect local school programming. Here is CBPP’s most recent conclusion: “Public investment in K-12 schools—crucial for communities to thrive and the U.S. economy to offer broad opportunity—has declined dramatically in a number of states over the last decade. Worse, most of the deepest-cutting states have also cut income tax rates, weakening their main revenue source for supporting schools. At least 23 states will provide less ‘general’ or ‘formula’ funding—the primary form of state support for elementary and secondary schools—in the current school year (2017) than when the Great Recession took hold in 2008… Eight states have cut general funding per student by about 10 percent or more over this period.  Five of those eight—Arizona, Kansas, North Carolina, Oklahoma, and Wisconsin—enacted income tax rate cuts costing tens or hundreds of millions of dollars each year rather than restore education funding… Thirty-five states provided less overall state funding per student in the 2014 school year (the most recent year available) than in the 2008 school year, before the recession took hold.  In 27 states, local government funding per student fell over the same period, adding to the damage of state funding cuts.”

Finally, in a recent November 2016 report, Exploring the Consequences of Charter School Expansion in U.S. Cities, Bruce Baker, the Rutgers school finance expert, warns that rapidly expanding privatization through the authorization of new charter schools is destabilizing a number of urban public school districts where the education marketplace is rapidly growing. Privatization is President Donald Trump’s proposed cure for what he believes are the financial and academic woes of our public schools.

Here is Baker’s warning: “If we consider a specific geographic space, like a major urban center, operating under the reality of finite available resources (local, state, and federal revenues), the goal is to provide the best possible system for all children citywide, given the resources available… Chartering, school choice, or market competition are not policy objectives in-and-of-themselves.  They are policy alternatives—courses of policy action—toward achieving these broader goals and must be evaluated in this light…  Of particular concern are those cases in which revenues are declining rapidly with enrollment decline, putting the squeeze on districts to reduce expenditures more rapidly than costs (potentially leading to significant annual deficits)… Of particular interest here is whether the reduction of enrollments from students transferring from district to charter schools leads to a manageable decline in total revenues, given declining enrollments of host districts.”

Baker concludes with a warning we should take seriously: “At the very least, federal and state policies intending to stimulate further charter growth must no longer be quality or integrity blind, assuming that market forces will induce necessary corrections.  The federal government in particular, in recent years, has poured significant funding into the expansion of chartering in states that have exhibited systemic failures of financial oversight coupled with weak educational outcomes.  The federal government has also through facilities financing support for charter schools, aided in the transfer of previously publicly held capital assets to private hands, as well as aided in the accumulation of privately held debt to be covered at public expense… There may come a time when policymakers and the public at large tires of the recent wave of charter expansion, becoming (even) more wary of tradeoffs that have been made.  Any significant reversal of course, reemphasis on district schools, tighter restriction on and mass closure of charter schools, is now encumbered with major logistical and financial barriers.”

In less technical terms Moody’s Investor Services has warned that charters threaten to destabilize their public school disricts—parasites destroying their hosts—particularly in big cities that were devastated by the foreclosure crisis.  for the Washington Post describes Moody’s conclusions: “While charters are everywhere — in at least 41 states — they tend to make up a bigger share of total enrollment in urban areas. And some urban districts face a downward spiral driven by population declines. It begins with people leaving the city or district. Then revenue declines, leading to program and service cuts. The cuts lead parents to seek out alternatives, and charters capture more students. As enrollment shifts to charters, public districts lose more revenue, and that can lead to more cuts. Rinse, repeat.”

Our society has historically been distinguished from many others by our aspiration to educate all of our children. Hiring real live, professionally credentialed teachers to educate 50 million children is likely to be pretty expensive.  Of course some tech entrepreneurs dream we can find a way to do it all online with scripted curriculum, and politicians like Donald Trump imagine we can find a way to save money by undermining teachers unions and ceasing to pay adequate salaries to the over 3 million teachers who now serve in our public schools.  Beware, because both of those ideas are really part of the agenda behind the lie that our public schools are “flush with cash.”

Tax Cuts Deliver Higher College Tuition, Fail to Grow the Overall Economy

I suppose you have noticed that substantive discussion of our nation’s problems has fallen by the way in this year’s election season. At best candidates are selling reform proposals without explaining exactly how such plans could be realized and precisely how they would address very real problems. Everybody seems to believe in free tuition at public colleges and universities, for example, but there are few clear answers about why college costs have skyrocketed in recent years and where the money to underwrite free tuition would come from.

Despite that historically our society has affirmed the role of public institutions paid for by taxes for ensuring essential services and protecting the good of the wider community, and despite that we have traditionally believed that the tax code should be progressive with the heaviest burden on those with the greatest financial means, an anti-tax climate now dominates our politics. Funding for essential state services—social services for the poor, public K-12 education, and in recent years state colleges and universities—has fallen by the way.  Doug Webber, an economist at Temple University, one of Pennsylvania’s public universities, explains: “It’s tempting to blame Temple’s shiny buildings and new administrators for the big increase in tuition. But there’s another, much more important reason for the rising costs.” Since 2000, “Pennsylvania’s state government (has) cut its per-student appropriations by $6,000 in inflation-adjusted dollars. The rapid increase in the cost of college in recent decades—and the associated explosion in student debt, which now totals nearly $1.3 trillion nationally—is all too familiar to many Americans. But few understand what has caused the tuition boom, particularly at the public institutions that enroll roughly two-thirds of all students at four-year colleges. Many commenters, particularly in the popular press, focus on ballooning administrative budgets and extravagant student amenities…. but by far the biggest driver of rising tuitions for public colleges has been declining state funding for higher education.”

Webber examines the facts: “At most, about a quarter of the increase in college tuition since 2000 can be attributed to rising faculty salaries, improved amenities and administrative bloat.  By comparison, the decline in state support accounts for about three-quarters of the rising cost of college… (I)f Pennsylvania restored funding for higher education to its 2000 levels, Pennsylvania’s public research institutions could reduce tuition by nearly $4,000 per year without altering their budgets.  For students, the impact could be even greater once loan fees and interest were taken into account… If funding had held steady, universities could have built new buildings, hired more administrators and tended to other priorities while still keeping tuition hikes in check. With huge budget cuts, big tuition increases were inevitable.”

Data updated in mid-August from the Center on Budget and Policy Priorities (CBPP), confirms that Webber’s analysis of public funding for state colleges and universities explains a national trend, not merely the sad reality in Pennsylvania, where the legislature has been rigidly committed to avoiding tax increases. “Of the states that have finalized their higher education budgets for the current school year, after adjusting for inflation, forty-six states—all except Montana, North Dakota, Wisconsin, and Wyoming—are spending less per student in the 2015-16 school year than they did before the recession… The average state is spending $1,598, or 18 percent, less per student than before the recession.”  While 38 states did increase per-student, higher education funding in the past year, the increases were too small to reverse the trend of diminishing state investment in institutions of higher learning.

Nine states have reduced per-student funding for their public colleges and universities by more than 30 percent since the 2008 recession began: Alabama, Arizona, Idaho, Illinois, Kentucky, Louisiana, New Hampshire, Pennsylvania, and South Carolina.

In the past year alone, Illinois cut per-student, higher education funding by $1,746, and five other states cut funding for their public colleges and universities by more than $250 per student: Alaska, Arizona, Oklahoma, West Virginia, and Wisconsin.

Unlike the federal government, states are required by law to balance their budgets every year.  When states cut income taxes or make them regressive and when they cut corporate taxes, there are less dollars for essential services like public K-12 education, and public colleges and universities. It is a matter of simple arithmetic. What is often overlooked is that along with the rising expenses for students when college tuition grows, state economies suffer as middle class workers like school teachers and counselors are laid off and as low-paid adjuncts replace tenure-track college professors.

Here is John Hanna’s most recent update for the Associated Press on the ongoing pain caused by Kansas Governor Sam Brownback’s experiment with tax cutting: “Kansas saw its tax collections fall $10 million short of expectations in August, and Republican Gov. Sam Brownback is blaming a soft economy even as his critics make his tax-cutting policies a key issue in the year’s elections. The state Department of Revenue’s report (at the end of August 2016)… marked the fourth consecutive month that Kansas has failed to hit its revenue projections, and tax collections have fallen short 10 of the past 12 months… Kansas repeatedly has missed monthly revenue targets and struggled to balance its budget since GOP legislators heeded Brownback’s call to slash personal income taxes in 2012 and 2013 as an economic stimulus.”

Politicians like to promise that tax cuts for the wealthy and for corporations will grow the economy—that prosperity will trickle down to the rest of us.  Paul Krugman, the Nobel Prize-winning economist, rejects such supply-side economics: “True, you can find self-proclaimed economic experts claiming to find overall evidence that low tax rates spur economic growth, but such experts invariably turn out to be on the payroll of right-wing pressure groups (and have an interesting habit of getting their numbers wrong). Independent studies of the correlation between tax rates and economic growth, for example by the Congressional Research Service, consistently find no relationship at all. There is no serious economic case for the tax-cut obsession.”

Economy Grows But State Funding for Public Schools Continues to Shrink

Here is what Wikipedia says about Grover Norquist:  “Grover Glenn Norquist…  is an American political advocate who is founder and president of Americans for Tax Reform, an organization that opposes all tax increases…. A Republican, he is the primary promoter of the “Taxpayer Protection Pledge,” a pledge signed by lawmakers who agree to oppose increases in marginal income tax rates for individuals and businesses, as well as net reductions or eliminations of deductions and credits without a matching reduced tax rate. Prior to the November 2012 election, the pledge was signed by 95% of all Republican members of Congress and all but one of the candidates running for the 2012 Republican presidential nomination… Norquist’s national strategy has included recruiting state and local politicians to support ATR’s stance on taxes.”

How has Norquist described the goal of his campaign against taxes? “My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub.”

You might imagine that Norquist is a kind of nut case, but lots of people have signed his pledge. In Ohio, my super-majority Republican state, for years and years our legislative leaders have been signing Norquist’s pledge and cutting taxes. Last week, the Plain Dealer described the plight of municipalities in Ohio caused by a rash of state tax cuts that have diminished funds the state has in the past allocated for essential servicesAlthough the economy has begun to spring back from the 2008 recession, Cleveland’s Mayor Frank Jackson is reported to have explained that Cleveland, “just cannot compete with a series of policies at the state level that, he says, rob local governments….  The Local Government Fund was created in 1935, as a promise to Ohioans that their support of the state’s first sales tax would mean that 40 percent of collections would come back to local governments and schools… In 2011, however, Gov. John Kasich, faced with an $8 billion shortfall, proposed a state budget that cut 25 percent of local government funding the following year and 50 percent in 2013…. By 2015, Cleveland’s annual share  of the Local Government Fund had been whittled to $26.5 million—a net loss of $29.5 million (annually) from pre-recession levels.” In 2005, former Governor Bob Taft and the legislature eliminated a tangible personal property tax on income and equipment that had helped fund municipal governments and school districts. They replaced it with a Commercial Activities Tax, which was then slashed by Governor Kasich and the legislature in 2011.  “Also built into Kasich’s 2011 budget bill was the controversial abolition of the estate tax.”  And finally at the end of 2014, Governor Kasich and the legislature passed a law to standardize and streamline Ohio’s income tax, a plan that will take effect in 2016 and further reduce state funding for municipalities and school districts (separate taxing jurisdictions in the state of Ohio).

It is axiomatic in public finance: if the federal government cuts taxes and the state government cuts taxes, the only way to maintain essential services is to go is back to citizens to increase local taxes—which is exactly what is happening here in my community. Across Ohio, according to the dogma of Grover Norquist which our legislature has embedded in state law, we cannot have “unvoted tax increases,” and so, in November my inner-ring suburban city government asked voters to increase the income tax.  In 2016 the school district will be asking voters to increase the millage. Because of all the tax cuts from the state, these new local taxes will (we hope) maintain current services.  In my community we are working hard to stay in place—just to keep from laying off garbage collectors and police and fire at the municipal level and to keep from increasing class size to alarming levels by laying off the teachers in our schools.  In these times when computers and the internet are making it possible to cut costs across some sectors, we are told we must economize in government too, but to collect garbage and put out fires and teach our children, we need to pay real people.  Roughly eighty percent of school budgets are spent on personnel.  If we cut taxes, we lose the people we depend on. (Increasing local taxes is inherently disequalizing, as some communities cannot afford to raise local taxes, but that is a topic for another day.)

In this context, it is significant that in December the Center on Budget and Policy Priorities (CBPP) updated a report it has been releasing  for several years, a report comparing overall funding for public education to what states were spending on public schools before the Great Recession in 2008: Most States Have Cut School Funding, and Some Continue Cutting.  Here is how the authors summarize their findings: “Most states provide less support per student for elementary and secondary schools—in some cases, much less—than before the Great Recession, our survey of state budget documents over the last three months finds.  Worse, some states are still cutting eight years after the recession took hold.  Our country’s future depends crucially on the quality of its schools, yet rather then raising K-12 funding to support proven reforms such as hiring and retaining excellent teachers, reducing class sizes, and expanding access to high quality early education, many states have headed in the opposite direction.  These cuts weaken schools’ capacity to develop the intelligence and creativity of the next generation….”

The report simply and clearly explains the trends in public funding for schools nationally and across the states.  The federal government provides about 9 percent of funding for public schools; states average 46 percent; and local taxes cover about 45 percent.  But the federal government and the states have been reducing their portions.  Congress reduced Title I compensation for schools serving children living in poverty by 11 percent between 2010 and 2015 and cut funding for the Individuals with Disabilities Education Act by 9 percent.  It is at the state level—the primary funder of public schools—where the most devastating spending reductions have occurred.  “At least 31 states provided less state funding per student in the 2014 school year (that is, the school year ending in 2014) than in the 2008 school year…. In at least 15 states, the cuts exceeded 10 percent… While data on total school funding in the current school year (2016) is not yet available, at least 25 states are still providing less ‘general’ or ‘formula’ funding—the primary form of state funding for schools—per student than in 2008.  In seven states, the cuts exceed 10 percent.  Most states raised ‘general’ funding per student slightly this year, but 12 states imposed new cuts, even as the national economy continues to improve.”

Which states reduced per-pupil funding for public schools by more than 10 percent?  Arizona, – 23.3%; Alabama, -21.4%; Idaho, -16.9%; Georgia, -16.5%; Mississippi, -15.4%; Oklahoma, -15.3%; South Dakota, -14.2%; Wisconsin, -14.2%; North Carolina, -13.9%; Kentucky, -12.1%; Virginia, -11.2%; Texas, -11%; New Mexico, -10.7%; South Carolina, -10.4%; and Kansas, -10.3%.

Local school districts have been unable to compensate: “In at least 18 states, local government funding per student fell over the same period.  In at least 27 states, local funding rose, but those increases rarely made up for cuts in state support.  Total local funding nationally—for the states where comparable data exist—declined between 2008 and 2014, adding to the damage from state funding cuts.” “Because schools rely so heavily on state aid, cuts to state funding (especially formula funding) generally force local school districts to scale back educational services, raise more revenue to cover the gap, or both.  When the Great Recession hit, however, property values fall sharply, making it hard for school districts to raise local property taxes —schools’ primary local funding source—without raising rates, which is politically challenging even in good times.  Raising rates was particularly difficult in the midst of a severe recession with steep declines in housing values in many areas.”

In mid-December, Jeff Bryant, writing for the Education Opportunity Network, summarized the implications of CBPP’s new report in a fine piece, The Important Education Issue Leaders Are Still Ignoring: “One of the more telling combinations of news stories from the past week found education policy insiders in Washington, DC rejoicing over the passage of a new law rewriting federal education policy while at the same time a new report revealed how political leadership is continuing to fail America’s public schools… (D)espite all the celebration surrounding the Every Student Succeeds Act, the issue that remains mostly unaddressed in education policy is the massive under-funding that most states continue to inflict on public schools… Importantly, as the CBPP commentary states, ‘money matters for educational outcomes,’ especially for low-income children, whose best interest, many have said, is the main intention of federal education policy.”

As you contemplate the new year, I encourage you to read both the Center on Budget and Policy Priorities’ accessible report and Jeff Bryant’s fine piece about its significance.

Charter Sector Sucks Public Funds Out of Underfunded Public Schools

Now that charter schools have been operating for two decades, our collective experience with these publicly funded and privately managed schools is increasingly raising questions about their impact on the traditional public school districts of which they are supposedly a part.  The deep fiscal threat is far more basic than the scandals arising from place to place due to lack of regulation by state legislatures.  Charter schools serve only about 6 percent of children across the United States.

Here are four recent reports in the press.

The Eli and Edythe Broad Foundation is reported this week by Howard Blume of the Los Angeles Times to have been circulating a memo proposing that the Los Angeles Unified Schools create 260 new charter schools intended to enroll 130,000 students.  Blume explains, “L.A. Unified already has more charters than any school system in the country, representing about 16% of total enrollment… But the proposed expansion would mean more than doubling the number of charter schools in Los Angeles, a feat that even backers say might prove demanding… Critics say charter schools create greater inequities because they frequently draw more-motivated and higher-achieving students and leave traditional schools worse off.  The situation, they say, leaves district schools with less money to serve a larger percentage of students with behavior problems and disabilities and those who need to learn English.”  A follow-up piece in the same newspaper quotes Los Angles school board president Steve Zimmer: “Everyone understands 250,000 kids will not be part of this.  There is collateral damage: We won’t be able to lower class size or provide comprehensive support our kids need.”  Zimmer and other board members accuse the Broad Foundation of trying to divert $490 million to charters, money that should be used for existing public schools.

In the School District of Philadelphia, Pennsylvania, an investigation last week posted at the joint website of the Philadelphia Inquirer and the Philadelphia News describes charter schools’ issuing bonds with very high interest rates to pay for exorbitantly expensive school buildings.  To cover their interest payments, several charters have sought rapidly to expand their enrollments and the tax dollars they can collect:  “Bonds—school debt sold to investors who are gradually paid back with interest—have become popular among charters because they allow lower borrowing costs than standard commercial loans… But the bonds that charter schools have tapped are still riskier and come with ‘junk’ ratings, carrying high interest rates… Today, an increasing number of charters are spending more of their budgets paying down debt than on actual instruction.”  One school is described as spending one third of its budget to occupy an expensive high-rise.  “The pressure can lead school administrators to push for even more expansion projects—more students mean more state funding to pay off debts.”  Michael Masch, the former schools finance chief of the School District of Philadelphia, explains the consequences for the public school district: “Masch expressed concern that the boom in charter expansion could reach a point of implosion, as the demand to finance new (charter) school buildings is derived mainly by the transfer of students out of traditional district schools. ‘There are no new students coming into the Philadelphia school district and yet we’re building all these new schools. At some point, you’re going to have to start closing schools.’ Masch also said that because charters get guaranteed funding based on the number of students they will enroll, their budgets stayed relatively stable while the district made deep cuts in response to a shortage of state education dollars.  As a result, construction of new district school buildings has ground to a halt. ‘Whether it’s a plan or a strategy or an unintended consequence, the reality is that you have brand-new buildings for charters while district schools are falling apart.  You’re starving one system to fund another.'”

Jeff Bryant recently investigated the explosive growth of charter schools in Florida and the impact on the huge county-wide public school districts in that state: “The damage inflicted by the spread of charters in Broward and elsewhere does not stop at the corrupt land deals and the mounting chaos in communities….  As early as 2011, it became apparent that the spread of charter schools in Broward and Miami-Dade was causing financial mayhem for local pubic schools…  (C)harter schools located in those districts were already ‘siphoning off $40-$50 million in state money’… As in most states where charter schools exist, Florida funnels state funding for charters through local school boards that ensure the charter school receives a proportion of operating funds based on the number of full-time students enrolled.  Local public schools receive funds much in the same way.  In this practice, where ‘the money follows the child,’ as each child transfers to a charter, state funding is added to the charter and subtracted from the public school’s state funding.  When a neighborhood school loses a percentage of students in a particular grade level or across grade levels to charters, the school can’t simply proportionally cut its permanent costs for things like transportation and physical plant.  It also can’t cut the costs of grade-level teaching staff proportionally…  So instead, the school cuts a support service—a reading specialist, a special education teacher, a librarian, an art of music teacher—to offset the loss of funding.”

In The Prize, her new book on the impact of the One Newark school plan hatched by then-mayor Cory Booker and Governor Chris Christie, with an infusion of private funding from Facebook’s Mark Zuckerberg, Dale Russakoff describes the threat to Newark’s public schools posed by a plan designed to emphasize rapid expansion of charter schools: “But the increasingly pressing question, in Newark and in cities around the country, was, What would become of the children left behind in district schools?  School systems in Philadelphia and Detroit were struggling to avert fiscal collapse.  Now Newark was at a tipping point, with more and more children and state dollars exiting for charters.  Booker, Christie, and Zuckerberg hadn’t planned for this impasse… Clearly no one had a road map….” (p. 198)

In the context of the warning from the Center on Budget and Policy Priorities that 30 states are spending less money on the total education budget than they did prior to the Great Recession in 2007, these writers worry about diverting more money to charter schools at the expense of already struggling public school districts.  One wonders whether policy makers have seriously considered the danger of re-slicing a fixed school funding pie to create an extra piece for a brand new education sector.

Proponents of charter schools promise that market competition will improve traditional schools. It is refreshing that reporters are actively challenging that notion and that the press is seriously exploring the threat posed to public school districts by the rapid growth of a charter sector that instead poses the most basic fiscal threat to already underfunded public schools.

You Get What You Pay For: Taxes and the Public Schools

Slashing income taxes will not grow your state’s economy, but it will very likely destroy your public schools.  If your state rolls back income taxes, your public schools will inevitably have fewer guidance counselors, and class sizes will be bigger—that is unless you can pass extra taxes locally to make up for the cuts in state revenue.  It is an old maxim: You get what you pay for.

Here is the warning that came in mid-May from the Center on Budget and Policy Priorities: “More than a dozen states have cut personal income tax rates in recent years in hopes of spurring their economies in the aftermath of the Great Recession.  Five states—Kansas, Maine, North Carolina, Ohio, and Wisconsin—enacted especially large cuts in the last five years.  In all five states, leading policymakers claimed that the tax cuts would produce stronger economic growth.  For example, after signing the cuts in his state, Kansas Governor Sam Brownback claimed, ‘Our new pro-growth tax policy will be like a shot of adrenaline into the heart of the Kansas economy.’  None of these big tax-cutting states have seen their economies surge since enacting the tax cuts.”

The Center on Budget and Policy Priorities report continues: “Four of the five states that enacted the largest personal income tax cuts in the last few years have had slower job growth since enacting their cuts than the nation as a whole… States with the biggest tax cuts in the 1990s grew jobs during the next economic cycle at an average rate only one-third as large as more cautious states… Kansas, which enacted the most aggressive personal income tax cuts of recent years, has nearly drained its operating reserves to pay for the tax cuts.  It now faces hundreds of millions of dollars in cuts to funding for schools and other priorities already damaged by the recession.”  It’s a race to the bottom among the tax-slashing states: “Because states must balance their budgets, they must pay for tax cuts by cutting state services, raising other taxes, or both  Those actions slow the economy, offsetting the economic benefit of the tax cuts.”

Chris Suellentrop, a writer for the NY Times Magazine, shifts the point of view by showing us this story through the distorted ideological lenses of members of the Kansas legislature and Kansas Governor Sam Brownback.  Things look different in Topeka, if you hang out in the halls of a statehouse where conservative Republicans dominate both houses and where Governor Brownback doggedly insists that Kansas’s economic future hinges on a “march to zero” income taxes.

Here is what Suellentrop learns by talking to his uncle, the vice-chair of the Tax Committee in the Kansas House of Representatives: “‘People are leaving Kansas,’ he told me. The state has no mountains and no beaches, and thousands of jobs that were lost during the Great Recession, especially in Wichita’s aircraft industry, never returned.  The march to zero, which includes an already-passed provision that exempts the owners of 330,000 businesses and farms in Kansas from income tax, was designed… to turn Kansas into a different sort of tourist attraction. As he and his fellow conservatives see it, it’s an ‘open for business’ sign, one they hope will draw free enterprise to the state, perhaps akin to the way the national debate over the expansion of slavery once drew young abolitionists from New England to the plains.  At the very least, they hope it will prevent young people and existing businesses from moving elsewhere, to places with ski lodges or surf shops.”

Suellentrop describes the move to the far-right in Kansas’ politics: “In the past four years, Brownback has remade the Kansas Republican Party in his likeness.  The party’s once-powerful moderate wing has withered after steep losses in consecutive primary elections, the main battleground where policy is determined in a one-party state.  In 2011, the Kansas House welcomed 33 new Republican members, and then 40 more in 2013, a turnover of more than half the body in just a few years.  The Senate’s moderate Republican president, Steve Morris, was ousted in 2012 with Brownback’s support.  It has been a striking transformation for a state party long associated with a more cooperative approach to politics.”

Suellentrop explains the clash between Brownback’s vision and fiscal reality in terms that the Center on Budget and Policy Priorities would confirm: “The budget itself, at least in broad strokes, is not a complicated document.  About half the state’s spending goes to K-12 education, with another 12 percent or so given to the state’s public colleges.  Around 20 percent goes to Medicaid, some more to pensions for teachers and state workers.  Add those numbers up and you get a budget that’s relatively inflexible, even for a governor and legislature eager to cut it.”

The problem for Kansas’ governor and legislators, as Suellentrop tells the story, is that they want good schools and universities, but they want to have the tax cuts, too.  So far Brownback’s income tax cuts haven’t brought the promised economic growth that would make all this work out: “Government revenues plummeted.  In fiscal year 2014, which ended about a year ago, Kansas took in almost $330 million less than it had anticipated, almost 6 percent below the estimates of the state’s nonpartisan experts.  According to Pew, at the end of 2014 only five states had experienced declines in tax revenues for three consecutive quarters: Alaska, Connecticut, North Carolina, Wisconsin and Kansas.  Moody’s cut its debt rating for Kansas in April of last year.”

Late night budget negotiations continued through the spring of 2015 and into this summer.  The legislature repealed the over-twenty-year-old school funding formula, freezing school funding for two years as the legislature figures all this out, but at the same time restoring millions of dollars in emergency school cuts made mid-budget last February.  In a nod to fiscal reality, on June 12th, the legislature passed a plan that, “raised the state’s sales tax to 6.5 percent, from 6.15 percent; eliminated most itemized deductions for income taxes; raised cigarette taxes, and preserved a watered-down version of Brownback’s ratchet (that turns any revenue growth in future years to income tax cuts).”

Hanging over these negotiations, Suellentrop reminds us, is  a long-running lawsuit “before the Kansas Supreme Court over whether the Legislature’s K-12 cuts were constitutional and satisfied the legal requirement to adequately and equitably educate Kansas children.”  In late June the state’s supreme court released an 87 page ruling that the legislature’s new plan to fund the schools without a formula violates the state constitution.  The Wichita Eagle reports: “The court ruled that the bill violates the state constitution, ‘both in regard to its adequacy of funding and in its change of, and in its embedding of, inequities in the provision of capital outlay state aid and supplemental general state aid.'”  The court clearly disputes the governor and legislature’s arithmetic by which they have claimed that the state is providing enough funding for schools this year and distributing it as fairly as it did under the old formula.  Additionally, in a long-running case which the Kansas Supreme Court had sent back to a lower court for additional action last December, even before this spring’s finagling, “the District Court panel ruled that school funding was inadequate under the state constitution.”

What’s the matter with Kansas? An ideology of tax slashing in this one-party state is clearly one of the primary problems.