Economy Grows But State Funding for Public Schools Continues to Shrink

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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.

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