“Public Schools Flush with Cash” — Trump’s Assessment Is Tragically Inaccurate

It is state budget season, a time fraught with accusations and distortions and even alternative facts, but one thing is very clear. When President Donald Trump declared in his Inaugural Address that public schools are “flush with cash,” he was either ignorant about some very basic realities or he was hinting about some sort of scorched earth federal policy—or both.

The President’s own federal budget proposal is due within weeks, and Robert Greenstein of the Center on Budget and Policy Priorities worries about what he thinks are likely to be large cuts to domestic discretionary spending: “Many of the cuts in the Trump team’s blueprint come from plans that the Heritage Foundation and the Republican Study Committee (RSC) issued last year, according to The Hill. The Heritage report called for more than $8.5 trillion in non-defense cuts… while the RSC report called for almost $7.5 trillion in such cuts. Moreover, the ‘Penny Plan’ that President Trump proposed during his campaign would slash non-defense discretionary funding by 2026 to an amount 37 percent below the 2010 level, adjusted for inflation, and nearly 40 percent below its lowest level under Ronald Reagan, when measured as a share of the economy. Rep. Mick Mulvaney, Trump’s nominee for OMB director, supports the Penny Plan.”

What are the realities across the state governments, where about 40 percent of school funding comes from? Despite the distortions induced by state budget politics, it is pretty clear that public schools are in trouble in many places.

Take Chicago, where, the Chicago Tribune reports: “Through legislation in Springfield, (Mayor Rahm) Emanuel’s administration had struck a tentative deal for the state to send CPS (Chicago Public Schools) an additional $215 million for teacher pensions, but that fell through when (Governor Bruce) Rauner vetoed the plan… Because of Rauner’s veto, according to the district, CPS is in the midst of instituting midyear cuts for the second year in a row. The district has put in place four furlough days, a $46 million school spending freeze, $18 million in potential cuts to independently operated (charter) schools and the elimination of $5 million in training programs to make up for roughly half of the unrealized assumption that state lawmakers would send $215 million to the district’s annual budget.”  The four unpaid furlough days for teachers, according to the district, will save $35 million, and the cuts to school discretionary funds will affect textbook purchases, after-school programs, field trips, and the number of hourly staff. The District cannot borrow because its credit rating has fallen to junk status. For all these reasons, on Tuesday, 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.'”

Meanwhile in Ohio, the Akron Beacon Journal just editorialized that despite a years’ long legal battle in which the Ohio Supreme Court found the school funding system unconstitutional—saying the state was merely determining school funding by cutting up the state budget pie and giving schools what was left over without making an attempt to cost out what good schools really need—Ohio continues its practice of “residual budgeting” for schools: “Residual budgeting. The governor reinforced the concept when he joked at a recent award ceremony for innovators in education: ‘I’d like to give you money, but all I can give you are plaques.’  He has stressed how tight the budget must be, school funding under his (2017-2018 budget) plan increasing just 1 percent, or short of the inflation rate. This increase isn’t the result of calculating the amount necessary to ensure that students receive an adequate education. It reflects, essentially, the money left over. This residual budgeting stems, in no small way, from the relentless tax-cutting of the governor and his fellow Republican lawmakers (during) the past decade. The state today generates $3 billion less in annual revenue. Imagine a share of that sum applied to needy school districts… (S)tate funding, in real dollars (is) still below the level in 2010.”

And in New York, Governor Andrew Cuomo is trying to repeal the New York Foundation Aid Formula, created ten years ago by New York’s legislature after the state’s school funding was declared unconstitutional. In a scathing commentary, David Sciarra, Executive Director of the Education Law Center, accuses Cuomo of calling for a return to residual budgeting and massive inequality: “In his proposed 2017-18 budget, Governor Andrew Cuomo is calling for repeal of New York’s Foundation Aid Formula, the 2007 law responding to the landmark case, Campaign for Fiscal Equity v. State (CFE)… In the wake of CFE, the Legislature enacted the Formula to move the state from funding schools based on available dollars and raw politics to year-to-year determinations based on student and school need. The Formula also allocated school aid based on district fiscal capacity to raise local revenue from property taxes. To accomplish this objective, the Formula provided for a four-year phase-in of increases in state aid, or $5.5 billion statewide, the vast majority targeted to the poorest urban and rural districts. In 2009, the state froze and then subsequently cut Formula aid.  Since taking office, Governor Cuomo has staunchly resisted increasing aid to move districts towards full Formula funding. The Formula remains underfunded by over $4 billion… The Governor’s announcement that he wants to eliminate the Formula is a stunning reversal of his 2010 campaign position when he made clear the state’s responsibility for full Formula funding.”

Then there is the fiscal disaster that is Kansas, where the courts have found school funding unconstitutional but there is no realistic remedy in sight. The legislature is divided about how to address a years’ long budget crisis stemming from big cuts to personal income taxes in 2012 and 2013.  The Associated Press’s John Hanna reported last week: “Top Republican legislators in Kansas on Tuesday cooked up an unappetizing budget-balancing stew of personal income tax increases and education spending cuts, defying GOP Gov. Sam Brownback on taxes and past court rulings on education funding.”  One state senate committee has proposed boosting income taxes while another suggests reducing state education aid by $279 per student. Hanna reports: “Kansas faces a projected shortfall of about $320 million in its current budget that must be closed before July 1 and total gaps of nearly $1.1 billion through June 2019.” Governor Brownback continues to insist, despite all evidence to the contrary, that the 2012-2013 personal income tax cuts will grow the economy.

The Center on Budget and Policy Priorities continues to warn: “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.”

“Flush with cash” is not the phrase I’d use to characterize this situation.

Our Fading Understanding of the Common Good

At the top of this blog is a quote from the late Senator Paul Wellstone, who describes our “nation of citizens called to a common purpose… tied to one another by a common bond.”  Wellstone is defining the idea of public responsibility—the common good.  A quaint notion these days. Think about the verbs in the Preamble to the U.S. Constitution: “We the People… establish… insure… provide…promote… secure… to ourselves and our posterity.”

More and more often today we seem to accept a very different notion: that good people are the ones “who give back.”  They have done well, and so they contribute through their charitable foundations or donate to the many causes or services they choose to support.  Notice that the operative verbs in this transaction are “to give” and “to choose.” A gift is very different than an obligation because giving grants power to the donor who gets to choose the recipient the giver deems worthy.  People who present gifts also get to choose what to give and and how much. The Preamble to our U.S. Constitution defines the recipient a little differently: “ourselves”—all of us—and “our posterity”—all of our children their children.

In Monday’s NY Times, in response to the disaster of Flint, Michigan’s lead-poisoned drinking water, Paul Krugman distinguishes between government spending on social insurance programs, Medicaid and Social Security—topics he explains are of understandable public debate due to ideological conflicts about the philosophy of government—and public goods:

“There should, however, be much less debate about spending on what Econ 101 calls public goods—things that benefit everyone and can’t be provided by the private sector.  Yes, we can differ over exactly how big a military we need or how dense and well-maintained the road network should be, but you wouldn’t expect controversy about spending enough to provide key public goods like basic education or safe drinking water.  Yet a funny thing has happened as hard-line conservatives have taken over many U.S. state governments.  Or actually, it’s not funny at all.  Not surprisingly, they have sought to cut social insurance spending on the poor.  In fact, many state governments dislike spending on the poor so much that they are rejecting a Medicaid expansion that wouldn’t cost them anything because it’s federally financed.  But what we also see is extreme penny pinching on public goods. It’s easy to come up with examples, Kansas, which made headlines with its failed strategy of cutting taxes in the expectation of an economic miracle, has tried to close the resulting budget gap largely with cuts in education.  North Carolina has also imposed drastic cuts on schools.  And in New Jersey, Chris Christie famously canceled a desperately needed rail tunnel under the Hudson.”

Michigan, where a state-appointed austerity fiscal manager sanctioned the cost cutting that has poisoned Flint’s children and where a series of fiscal managers have run up the long-term debts of Detroit’s public schools to a total of $3.5 billion, is this week’s poster child for slashing spending on public goods.  But there is another state that is currently very much in the news: Illinois, where conservative Republican governor, Bruce Rauner, is embroiled in a state budget fight with a super-majority Democratic legislature—a budget fight that has dragged the state through months without a budget.  In Illinois the political fighting is so ugly that it is hard to parse out exactly what what may be posturing, but it is evident that the students of the Chicago Public Schools and their teachers are the losers. Chicago Public Schools face a deficit that has accumulated over many years: “This year, the district has a $480 million hole to fill in its current budget.” Notice that our society’s sense of public obligation to our poorest children—in cities like Detroit and Chicago—seems to slip away pretty easily.

Last week, according to DNA Info, “The district said it was cutting 433 administrative positions, including laying off 227 employees Friday… ‘We are gonna make Central Office cuts and reforms so we don’t have to impact the classroom, where we’re making significant educational gains for children,’ (Mayor Rahm) Emanuel said.”  Through these and other cuts, CPS seeks to cut $45.1 million.  In the meantime, the school district will have to borrow, despite that its credit rating has been downgraded to “junk” status.

Chicago’s mayor and the CEO of the school system, Forrest Claypool, blame the state and a Chicago teachers’ pension system that has been underfunded by previous administrations and that, unlike the pension system for teachers in other Illinois school districts, receives no state contributions.  And they blame Illinois school finance: “‘The governor is defending a school funding system that is separate but unequal. Our children are facing systematic discrimination.  CPS represents 20 percent of state enrollment, but gets just 15 percent of state funding, even though 86 percent of our children live in poverty.”

Like many other states, Illinois is failing to drive state funding to the neediest school districts serving masses of children in poverty. The Education Law Center’s Is School Funding Fair? A National Report Card awards the state of Illinois a grade of “F” for funding distribution.  The report explains, “The level of funding should increase relative to the level of concentrated student poverty—that is, state finance systems should provide more funding to districts serving larger shares of students in poverty… Student poverty—especially concentrated student poverty—is the most critical variable affecting funding levels.  Student and school poverty correlates with, and is a proxy for, a multitude of factors that increase the costs of providing equal educational opportunity…”

Of course, in Illinois as in lots of states, the school districts that are in trouble are those that serve masses of poor children.  This reality means that the debate about provision of public goods is affected by what Krugman calls the “values” debate about how much money ought to be spent on the poor:  “In the modern world, much government spending goes to social insurance programs—things like Social Security, Medicare and so on, that are supposed to protect citizens from the misfortunes of life. Such spending is the subject of fierce political debate, and understandably so. Liberals want to help the poor and unlucky, conservatives want to let people keep their hard-earned income, and there’s no right answer to this debate, because it’s a question of values.”

Krugman separates the issue of provision of public goods from the values question about whether and how we protect our most vulnerable citizens, but in real life, what he calls the “values question” gets mixed together with with the definition of what public goods we need to pay taxes to provide.  Our debate about the obligation to provide public schooling—a public good—is very often colored by the political debate about equity.  How much should the state have to add to help the children in Detroit and Chicago where the costs of educating masses of impoverished children are far greater than the costs in middle class school districts?

And in Chicago there is another ideological debate, this time about increased privatization as Mayor Rahm Emanuel and school CEO Forrest Claypool continue to post requests for proposals that offer charter school operators the chance to expand the number of charter schools, which then draw children and the state’s per-pupil funding from the city’s struggling public schools.

I worry, however, that underneath all the politics and underneath the clash of ideologies, the understanding of public obligation is fading.  Do we imagine that, like Bill Gates and Mark Zuckerberg, we all get to choose the way we give back?  Or are all of us—including Gates and Zuckerberg—expected to contribute through progressively assessed taxes for basic public goods?  Are we losing the understanding that the common good—represented in clean water, good schools, sound infrastructure, and good roads— is everybody’s responsibility?