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.

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Oliver Wendell Holmes: “Taxes Are What We Pay for Civilized Society.”

You will notice that I did not mention the issue of school funding in the title of this post. Neither did I mention the name of the state that is the subject of the post. While I cannot tell exactly who is reading this blog, WordPress statistics tell me which posts are viewed, and I know that school funding is a topic people don’t like to read about—especially if it is in somebody else’s state.

School funding is not a taboo subject, however, if the fight is happening in your state. If we are parents, we know that what’s at stake is a class size of 32 children for third grade, or the presence of a school nurse, or an elementary school library that is staffed and unlocked. We know that the number of college counselors at the high school and the presence of the marching band or the orchestra might be at stake. We also know what pay-to-play means in a school-specific context where fees to play football or run track are threatened if the school funding is reduced. This is all pretty much invisible to other people, however. Because schools are buildings most of us rarely enter, we cannot see how money translates directly into services for children.

I hope that introduction is enough to make you feel obligated to finish reading this post, because I believe it is about some of the most important concerns for our society.  Do we feel an obligation to help the children in our nuclear family succeed or do we have an obligation to all children and the role of their education for our broader society? Do we somehow really believe that education is a competitive, zero sum game and that if other children win, our own children will lose? Are we willing to spend some of what we have earned to support the institutions of our community and our state?  Is cutting taxes more important than anything else?  Do we really believe deep in our hearts: “I earned it so I should get to keep it!”?

This post is—yet again—about Kansas. Kansas matters because what Kansas does about its tax cuts and its state budget and its school funding is really about the issues in many states. And what’s the matter with Kansas is also the problem in our Congressional debate about the Affordable Care Act and the impact of Congressional freezes like the Sequester on the federal budget.

You’ll remember that Governor Sam Brownback just vetoed a state budget that would have increased taxes to raise $1 billion over the next two years to help remedy years of budget shortfalls that have resulted from his income tax cuts in 2012 and 2013.  Brownback has dreamed that his experiment in income tax slashing would grow the state’s economy, but economic growth has not followed.

You may remember that a school funding inequity decision from the Kansas Supreme Court last year sent some additional money to Kansas’ poorest school districts. You may also remember that a school funding adequacy case, Gannon v. State of Kansas, has been making its way through the courts.

You may have forgotten that the anti-taxers in Kansas have been so desperate to save money they first tried (unsuccessfully) to pass a constitutional amendment to make school funding solely a legislative matter over which the courts had no jurisdiction. When that failed, and because court justices face retention elections every six years in Kansas, money was spent on campaigns to defeat four of the justices who have supported increased funding for public education. But all the justices targeted by the anti-taxers were reelected last November.  And a sizeable number of moderates who are not so committed to tax slashing were also elected to the state’s legislature in November.

All this led up to what happened on March 2, when the Supreme Court in Kansas announced a decision in Gannon v. State of Kansas. Here is John Hanna of the Associated Press: “Kansas’ highest court on Thursday ordered the state to increase its spending on public schools, which could further complicate the state’s dire budget problems and increase pressure to undo large tax cuts championed by Republican Gov. Sam Brownback.  The unanimous state Supreme Court ruling gave the Republican-controlled Legislature until the end of June to to enact a new school funding law.”  Hanna explains: “Many moderate Republicans and Democrats in the Legislature favor rolling back the large income tax cuts enacted in 2012 and 2013, which the conservative governor pushed as a way to stimulate the economy.  The state has struggled to balance its budget ever since, and even some Republican voters have come to view the tax cuts as a failure.”

The Gannon lawsuit was brought by four school districts, Wichita, Hutchinson, Kansas City and Dodge City, but last week’s Supreme Court’s decision demands increased school funding across the state.  The Wichita Eagle outlines the implications of the decision: “It gave lawmakers until June 30 to craft a new school finance formula that meets constitutional funding requirements. If they don’t, the state will have no constitutional mechanism for funding schools, which could lead to school closures. The court ruled unanimously that Gov. Sam Brownback’s ‘block grant’ funding system for schools is unconstitutional, siding with school districts that complained it underfunded their operations.”

School funding is an important piece of the state budget because in Kansas, according to Hanna, “The state spends more than half of its tax dollars on public schools.” Some allege, of course, that the fact that public schools make up large percentages of all state budgets is a symptom of our society’s overindulgence in elegant public schools at the public expense. President Donald Trump made such an allegation in his inaugural address when he declared that public schools are “flush with cash.” The reality, of course, is that schools cannot substitute cheaper robots and computers and create the climate of caring and trust our children need.  Public schools employ  professional teachers and counselors because that is what our society must expect for our children.  This is an expensive proposition when it comes to serving 50 million children across the United States.

In Kansas, the Wichita Eagle quotes Alan Rupe, the plaintiffs’ attorney, who commented that last week’s decision should not surprise anybody: “The Kansas Supreme Court has finally confirmed what anyone who has recently stepped inside a Kansas public school already knew: Kansas public education is significantly underfunded.”

And Wichita’s state senator, Lynn Rogers, who also serves on the Wichita Board of Education, declared: This is 10 years coming, and the state has lost every case so far… We’ve lost a whole generation of kids with inadequate funding, and hopefully this will communicate to the state how important it is not to lose a single kid, and that we need to do better than what we’ve done.”

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.”

Illinois Budget Crisis Threatens to Slash $480 Million from Chicago Schools Mid-Year

Chicago teachers are voting this week to authorize a strike, though it wouldn’t occur any time prior to March 2016. Catalyst Chicago quotes Karen Lewis, President of the Chicago Teachers Union, explaining, “We don’t want a strike; we’d like to have a settled contract.” But the contract negotiations have dragged on and on and have been complicated by the budget crisis in Illinois, one of two states that, by mid-December, lacks a state budget.

Valerie Strauss in the Washington Post reports: “The union’s contract with the city expired last summer, and talks have been deadlocked.”  Here is how Catalyst describes some of the impasse: “The district says the CTU is asking for an additional $1.3 billion in spending it can’t afford.”  “Among the union’s contract proposals: enforceable lower class sizes; full-day free preschool for low-income 3-and 4-year-olds; more community schools; fewer standardized tests; an end to school closings and charter expansions; and a minimum $15 hourly salary for all CPS employees.”

The Chicago Tribune presents the demands from the school district’s point of view: “According to the district, CTU wants more than 1,000 new school nurses, psychologists and social workers; hundreds of counselors and case managers; a 3 percent salary increase; and pay for snow days.  The district also asserts it would have to hire more than 5,000 teachers to accommodate a union demand to shrink classroom sizes.”  Jesse Sharkey, vice president of the Chicago Teachers Union responds that the board of education, “has rejected every demand to improve conditions in our schools and asked for a contract that amounts to $653 million in cuts, not counting the staff cuts.”

This is not merely a teachers’ contract dispute. Underneath the financial problems in Chicago’s public schools is Illinois’ state budget crisis which threatens $480 in anticipated state funding.  Chicago’s DNAInfo describes plans by Chicago Public Schools, “to lay off 5,000 teachers if state lawmakers don’t give the district $480 million that has been budgeted by Chicago Public Schools, but not yet authorized by the General Assembly.” An elementary school profiled in the article is reported to be in danger of losing 10 teachers and watching its classes balloon to 45 students.  The threat is that Chicago Public Schools will need to slash $480 million mid-school-year.

Last week 167 school principals in Chicago released a letter to protest threatened mid-year cuts: “All principals agree on one thing—students suffer when they lose teachers.  Budget cuts to schools will result in many teachers losing their jobs… Imagine a 20 percent cut at a high school of 1,000 children: 10-12 positions—the entire math and foreign language departments.  Cuts made during the year impact student schedules and classroom assignments.  Changes like these negatively affect a school’s culture and climate which our communities have worked so hard to build.”  In their letter, the school principals recommend concrete ideas to resolve the budget impasse between Illinois’ Democratic legislature and the fiscal conservative, Governor Bruce Rauner.  Fix the pension crisis.  Expand the sales tax to cover consumer services.  Raise personal income tax rates that were rolled back last January.  And if the crisis continues at the state level, the City of Chicago should divert funds from Tax Increment Financing to the schools, halt any construction of new buildings and divert the money to operations, and slash central office positions rather than teachers and support staff in the schools.

Reuters summarizes the conclusions of a more technical report just released by the Fiscal Futures Project at the University of Illinois: “Illinois has bent or broken every sound budgeting practice and should adopt reforms to help dig its way out of a huge pile of debt… Illinois has the lowest credit ratings and worst-funded pensions among all 50 states.  An impasse between the Republican governor and Democrats who control the legislature has left Illinois without a budget halfway through fiscal 2016.  The state’s unpaid bill backlog, a barometer of its chronic structural budget deficit, is projected to hit $8.5 billion by the end of the month… The state has… borrowed, delayed bill payments and relied on nonrecurring revenue to cover operating costs, as well as neglecting its aging infrastructure, according to the study.”

It is easy to think about structural deficits in technical terms defined by dry numbers.  Chicago’s teachers and school principals are asking lawmakers to think about threatened cuts by imagining the impact of losing many needed teachers and support staff in an elementary school or a high school—the effect on children, the effect on school culture, the threat to a supportive school climate that ensures respect and safety.

School Funding Declines due to Tax Cutting, Austerity Budgeting, and Paring Down Title I and IDEA

A new report from the Center on Budget and Policy Priorities (CBPP) documents that 35 states continued to spend less in the 2013-2014 school year on their public education formulas than they did before the recession hit in 2008.  Alabama and Oklahoma have cut per-pupil school funding by over 20 percent since 2008.  In 14 states, per-student funding remains fully 10 percent below what those states were spending before the recession. Fifteen states are providing less funding per student than they did a year ago.  At the same time, according to the report, an additional 775,000 students are now enrolled in public schools compared to the 2007-2008 school year. (All CBPP statistics are adjusted for inflation.)

What do these numbers say about our society?  Do we believe it is our public responsibility to educate all children?  Are we committed to expanding opportunity for the children who have been left behind by racial segregation and economic inequality?  Is society’s commitment to educating our children diminishing?  Have we stopped believing in the public schools and hence stopped investing?  Have state elected officials come to accept widespread rhetoric about “failing” public schools, language generated by our national test-and-punish law, No Child Left Behind?  And if so, is disinvestment a smart response?  A moral response?  What do the budget priorities of legislatures across our 50 states say about our society?

Maybe we have come to accept the rhetoric of those who have signed the pledge distributed widely across state legislatures by Grover Norquist and his Americans for Tax Reform. Legislators who sign the pledge promise they will never vote to raise taxes. If states persist in reducing the funds available by cutting taxes, then school funding is likely to diminish over time.  The arithmetic is very simple.  Because public education for over 50 million children in the United States is such a large endeavor, and because 44 percent (according to CBPP’s recent report) of all education funding comes from state governments, public education remains the biggest budget line for most states.   CBPP reminds us: “States have avoided raising new revenues.  States have disproportionately relied on spending cuts to close the very large budget shortfalls they have faced over the last several years, rather than a more balanced mix of spending cuts and revenue increases  Between fiscal years 2008 and 2013, states closed 45 percent of their budget gaps through spending cuts, and only 16 percent of their budget gaps through taxes and fees….”

Here is how the tax cutting has played out in my state, Ohio. Columnist Thomas Suddes, writing for the Cleveland Plain Dealer on June 22, declared, “Republicans grabbed control of the state Senate 30 years ago this November by pledging to cut Ohio’s income tax.  They, and House Republicans, have vowed the same ever since.”  Suddes traces the history of tax cuts—the elimination of the tax on inventory and equipment that shifted the responsibility for paying property taxes  from businesses to homeowners and farmers—the elimination of the estate tax—the 21 percent cut in the income tax in 2005 followed by more income tax cuts including one just signed into law last week.

CBPP notes that local school districts have not been able to make up for cuts in state revenue: “The precipitous decline in property values since the start of the recession, coupled with political or legal difficulties in many localities of raising property taxes, make raising significant additional revenue through the property tax very difficult for school districts.”  While wealthy communities may be able to develop the political momentum to raise local taxes, in poorer communities the residents are less likely  to be able to afford a local levy.

To make matters worse, CBPP reports recent cuts to federal funding for the formula programs that have been a lifeline for local districts for a generation: “Adding to states’ struggles, federal policymakers have cut ongoing federal funding for states and localities, thereby worsening state fiscal conditions.  For example, since 2010, federal spending for Title I—the major federal assistance program for high-poverty schools—is down 12 percent after adjusting for inflation, and federal spending on disabled education is down 11 percent.”  A new summary from Five Thirty-Eight Economics notes that, “The cuts haven’t been evenly distributed.  Most federal education aid targets two groups, low-income and special education students, who are overrepresented in urban school districts.  As a result, urban districts have been hit harder by the recent cuts.” As federal spending fell by 20 percent in the years between 2010 and 2012, “Nearly 90 percent of big-city school districts spent less per student in 2012 than when the recession ended in 2009.”