School Funding: A Moral, Not a Fiscal Problem

Taxes are merely a tool by which governments can fund the services needed in a good society.  Today instead, as the Freedom Caucus dominates the House of Representatives and Donald Trump sets sets the agenda, taxes and government are seen as the enemy—something to eliminate.  Grover Norquist, who leads Americans for Tax Reform and who has convinced a mass of state legislators to sign his pledge never to raise taxes, is famous for his declaration: “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” In the eyes of many of today’s politicians, tax policy has become not a tool of government but a goal in itself along with the goal of reducing the programs and services the government provides.

Some of the services tax cutters want to eliminate are provided by public schools.  Even before President Donald Trump announced his budget outline last week, federal funding for schools had declined because many in Congress have prioritized tax cutting. In October 2016, the Center on Budget and Policy Priorities reported that the two largest funding streams for K-12 public schools have been growing smaller. Funding for Title I, the program for schools serving concentrations of children in poverty dropped 8.3 percent (adjusted for inflation) between 2010 and 2016 and funding to support federally mandated programs for special education dropped 6.4 percent (again adjusted for inflation).

If tax reduction were merely a federal malaise, it would not be so serious for schools, for federal funds pay for merely 10 percent of school funding, with the bulk of the money roughly split between states and local school districts. But because schools make up one of the the biggest budget lines in every state, tax slashing by the state legislative endorsers of Norquist’s pledge is definitely affecting public schools. That is why we are seeing more and more reports like this one about school districts in rural and small towns instituting four-day school weeks.  When states cut the budget and federal programs are also reduced, local school districts can either raise millage or cut programs.

School funding problems continue on display during this state budget season. In New York, the Alliance for Quality Education (AQE) released a white paper documenting that again this year Governor Andrew Cuomo’s budget fails to fulfill the state’s commitment under the 2007 Campaign for Fiscal Equity (CFE) decision to fund schools adequately under the standards of New York’s constitution. AQE condemns Cuomo’s recent budget proposal: “The 2017-18 Executive Budget repeals and does not replace the Foundation Aid formula, and would return New York State to the pre-CFE era when political machinations and arbitrary formulas guided the distribution of school aid—without regard for student need.”  In a new lawsuit, parents in three New York school districts have also just demanded that an appeals court release funds that had already been allocated to their school districts but that have been frozen by another court: “On December 28, 2016, Judge Kimberly O’Connor in Albany found that the budget director exceeded his legal authority in withholding the grants and ordered the funds be immediately released… for distribution to support vital programs at the schools.”  But, “Governor Cuomo decided to appeal Judge O’Connor’s ruling last month. Under New York law, the appeal triggers an automatic stay of the order to release the funds.”  The school districts list the services they cannot afford to provide without the funds: social work and counseling, family outreach, academic interventions, professional development, and extended learning time.”

And in Illinois—where weeks ago Governor Bruce Rauner vetoed a bill to send $215 million that had already been promised by the state to help the Chicago Public Schools avert bankruptcy—Rauner has finally agreed to release the funds, but only if legislators will redo the state’s pension system.  Rauner is holding Chicago’s children and teachers hostage.  A reporter for Chicago’s DNA Info describes  Illinois Senate President John Cullerton’s response to Rauner’s pension reform ransom demand: “The legislation would require public sector employees to give up ‘pension benefits in return for a one-time fix for CPS and no guarantee the state will offer the same assistance next year or any other year.” While there is politics involved in all this wrangling, experts document that Illinois imposes a structurally flawed funding system on Chicago and other poor school districts. The Education Law Center has identified Illinois school funding as among the nation’s most inequitable and has identified Chicago as chronically among “the most fiscally disadvantaged large urban districts in the nation.”

Kansas is the state where relief suddenly seems possible. Ironically Donald Trump himself may intervene (sort of) in the school funding crisis. It has been reported that Trump may be appointing Governor Sam Brownback to a post with the U.S. Mission to the United Nations in Rome, where Brownback would coordinate the work of agencies involved in food and agriculture. Yesterday the NY Times editorialized: “Kansas can only hope that reports are true that the Trump administration will let… (Kansas’s) governor, Sam Brownback, escape the disaster he created in Topeka….”  The editorial continues: “Mr. Brownback, a Republican first elected on the Tea Party crest of 2010, used his office as a laboratory for conservative budget experimentation. His insistence that tax cuts create, not diminish, revenues has left the state facing a ballooning deficit plus a ruling by the state Supreme Court that Kansas schoolchildren have been unconstitutionally shortchanged in state aid for years, with the poorest minority children most deprived. The court ruled this month that they would shut the state’s schools if funding wasn’t made equitable by June 30.”  The NY Times describes Kansas families as “experiencing the deepening budget crisis firsthand in shortened school hours and resources as the state suffered two credit downgrades. Public protest led to a number of Brownback loyalists voted out last year, with legislative newcomers igniting a budget revolt against the governor.”

We can only hope for Brownback’s departure through the confirmation of the Trump appointment to Rome. But there is some question about what would happen then. It is to be hoped that if he becomes governor, Lt. Gov. Jeff Colyer, also a fiscal conservative, will not veto—as Brownback last month vetoed a bill passed by the legislature to increase taxes by $1 billion over two years—the necessary revenue to support the state’s schools.

In Final Test, a book written long before our country faced today’s army of tax slashers—President Trump, Vice President Mike Pence, Education Secretary Betsy DeVos, Congressional Budget Office Director Mick Mulvaney and the members of the House Freedom Caucus—Peter Schrag, the retired editorial director of the Sacramento Bee, ruminated about the decades-long California school funding crisis following the passage of Proposition 13 and the role of the courts in trying to rectify legislative failures to fund schools. In chapters on school finance court battles in California, New Jersey, Ohio, Alabama, North Carolina, Maryland, and New York, Schrag ponders a question that is more timely today than it was when his book was published in 2003: “Court decisions—particularly those that seem to require states to provide ever-richer resources to under-performing children—will almost certainly run into increasing political resistance, on both financial and equity grounds. To what extent are middle-income and affluent voters, the people who come to the polls, willing to send their local and state tax dollars to support extra resources for other people’s children, especially if they’re poor, black, or Latino?” (p.238)

Of course, that is what the social contract is all about. School finance is not so much a fiscal as a moral issue.

Chicago Public Schools Teeter on Fiscal Precipice

The Chicago Public Schools instituted a sudden, early February, unpaid four-day teacher furlough to save $35 million, along with a $46 million spending freeze on school discretionary funds that pay for textbook purchases, after-school programs, field trips, and hourly aides. But, at the end of last week after massive protests, the school district restored $15 million, when it became apparent that the city’s poorest schools had experienced the deepest cuts.

Lauren Fitzpatrick of the Sun-Times reports: “Money was given back to 434 schools that qualify for federal Title I money for low income children….”  “The Sun-Times found that schools where three of four children are low-income generally had their discretionary funds cut at twice the rate as schools where one in four children were low-income. The newspaper also found that majority Hispanic schools saw freezes that were twice as large as majority white schools.”

Juan Perez of the Chicago Tribune explains why schools serving the poorest Hispanic and African American students were unfairly penalized by the budget freeze: “CPS originally determined the amount of money schools had to cut in the spending freeze by looking at the money each building held in three accounts: funds received from the district on a per-pupil basis; supplemental state aid meant to help educate low-income students; and federal grant funds. These state and federal dollars aren’t meant to be used on general operating costs, but are intended to keep class sizes low and support learning programs in schools that have a higher number of low-income and minority students…  If poorer schools or buildings with large numbers of English-language learners had not yet spent their state and federal aid, those schools had more money to cut and were then in many cases hit hardest by the spending freeze.”

The problem is that nobody knows where the money to cover the restoration of the funds is going to come from. Restoring $15 million to the poorest schools will add to the district’s projected budget gap, bringing the total shortfall to $129 million. The school district will struggle to borrow because its credit rating has fallen to junk status. For all these reasons, earlier this month the Chicago Public Schools sued the state of Illinois, “accusing the state of employing ‘separate and unequal systems of funding for public education in Illinois.’ Chicago Public Schools officials describe the legal move as the ‘last stand’ for a cash strapped district that’s ‘on the brink.’”

Yesterday afternoon, Forrest Claypool, the school district’s Chief Executive Officer, announced that unless the state of Illinois supports the district with additional funding, the school year for students will end on June 1st— nearly three weeks early. DNA Info quotes Claypool:  “This is the worst-case scenario… We have very few good options left.”

A big part of the problem is Illinois’ school funding, and a years’ long pension crisis. Perez notes that this year’s CPS budget was based on a promised $215 million from the state for teacher pensions. However, Governor Bruce Rauner vetoed the pension deal.  And  negotiations continue in Springfield to  get a state budget passed and to fix the state’s school funding.  John O’Connor of the Associated Press reminds us that, “Illinois has been without a budget since July 2015, two months after Rauner took office, the nation’s longest state budget stalemate in nearly a century.”  O’Connor adds: “Even without an annual spending plan, state government continues to operate largely because of court orders and intermittent appropriations by lawmakers.  But the picture is bleak.  Without action, Illinois will have a $5.3 billion deficit when the current fiscal year ends June 30. There is a backlog of $11 billion in overdue bills. State pension programs are $130 billion short of what they need to pay promised benefits to retired and current employees.”

In a new report for the Education Law Center and Rutgers Graduate School of Education, America’s Most Fiscally Disadvantaged School Districts, school funding expert Bruce Baker highlights the funding crisis for Chicago’s schools: “This report identifies the most fiscally disadvantaged school districts in the country—those with higher than average student needs in their labor-market location and lower than average resources when state and local revenues are combined… The city of Chicago is, year after year, one of the most fiscally disadvantaged large urban districts in the nation.  Illinois has a highly regressive school funding system.”