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Gill Montague School: Info Pieces

By Jeff Singleton, March, 2007

Part 1 of a 2-part series

[Note: The following two-part opinion piece on public education finance appeared in the Montague Reporter on March 15 and 22, 2007. Jeff Singleton is chair of the Montague, MA Finance Committee. The opinions here are his alone and do not reflect official positions of the committee.]

Montague Center (March 15, 2007) - Governor Deval Patrick’s first state budget represents a complete disaster for many communities in Western Massachusetts. I am not blaming the new governor for this. His budget reflects fiscal constraints at the state level, and a dynamic set in motion a decade ago. But let’s be honest about what is really going on here.

The bottom line is that state aid increases do not come close to matching basic cost increases for level serviced school budgets. In some cases, such as the Gill-Montague Regional School District, state aid is virtually level-funded. The result is that local school districts will, yet again, pass on huge cost increases to cities and towns, cost increases they cannot afford. Even in school districts that do well under the aid formula, property tax overrides may well be required to pick up the burden left by the state.

Basic Arithmetic and its Consequences

The local arithmetic is simple and stark, but seems to completely escape the notice of state officials, fixated on their own budget problems. The average local school district budget increases by between five and ten percent each year, just to maintain existing services. Health insurance, pensions, negotiated wage increases, special education and utilities account for most of this. For the Gill-Montague school district, with its budget of approximately $16 million, this means an increase of nearly $1,000,000 for ’08, just to tread water. State aid should finance approximately 45% of this increase, since that is the portion of local spending bankrolled by the state. But this has rarely happened since the late 1990s.

After subtracting inadequate levels of state aid, school districts will then turn to local government for amounts that bear absolutely no relationship whatsoever to local revenues. In the case of Montague, for example, the Gill Montague school district could request an assessment increase of over $800,000 million, just to fund a “level services budget.” But our property tax revenues increase by only about  $400,000 annually and at least half of this must finance cost increases in town services. In short, there is no relationship between the burden the state leaves to towns like Montague, and the towns’ ability to pay.

The result will be depressingly familiar to anyone who has followed the politics of local government finance in recent years. We will see weeks of bruising budget battles that divide communities and undermine support for public education. School districts will request large increases in their assessments because “education and kids are important.” They will say that if the gap is not covered, massive teacher layoffs, the elimination of popular programs like art and music, and the closing of good schools will occur. Cities and towns will react defensively to these perennial requests that seem to ignore the reality of local revenues. Should they once again cut fire protection, highway, library and police services to “save the schools”? Should they increase property taxes? These constant local budget battles pit town services against school districts, taxpayers against teachers, the elderly against young parents. Once again, it will be an ugly and divisive budget season. 

The Disconnect

What is astonishing about all this is the fact that the impact of chronically inadequate levels of state aid on both local public education and the fabric of local communities seems to almost completely escape state officials. For example, Governor Patrick is being widely applauded for increasing school aid by approximately 5% statewide. Despite the fact that this continues the meltdown that has been going on for nearly eight years, the governor is applauded because the state has its own budget crisis and local aid is faring better than other state services.

There is, in short, almost a total disconnect between what state officials, and many in the media, see and report and what those in the trenches at the local level annually experience. Why?

Part of the reason, as the example of Patrick’s budget proposal suggests, is that state officials understandably see school aid in the context of their own budgets. From this perspective, Chapter 70 school aid has been doing rather well compared to, say, health care programs for the poor or the state college systems. And if you go back a few years to the mid-1990s, the state poured billions into local school aid. Yet local communities are still demanding more money and accusing state officials of not caring about education. And poor communities that got the most money are complaining the loudest. To many state officials, including our legislators, this makes no sense.

The disconnect is compounded by the rhetoric of local officials advocating for more state aid. They often seem unrealistic about their needs and throw unsupportable criticisms at the state. There is much talk about “cuts” in state aid that, with the exception of the 2002 recession, have not really occurred. The state and federal governments are constantly accused of imposing “unfunded mandates” like special education and No Child Left Behind on school districts. The state poured billions into local communities in part to help improve MCAS scores and has implemented a costly “circuit breaker” program to help finance out-of-district special education placements. While local districts are still unable to finance the cost of these mandates without cutting other programs, to call them “unfunded” undermines credibility.

There is also much complaining about “the formula,” that complicated mechanism that determines how much local districts get in state aid. But fixing the formula will not solve the basic problem – the constant gap between basic cost increases and revenues. It would only produce (marginal) winners and (big) losers, as inadequate aid is divvied up.

Perhaps most problematic is rhetoric that focuses on the value of education. We are told that “education matters” and “kids count,” as if state officials do not care about education or kids. The court cases that led to education reform in the 1990s, focusing on hard-to-define notions of equity and adequacy, encouraged this rhetoric. The problem is that the state of Massachusetts certainly does care about kids, which is why it has poured billions into local schools in the 1990s. Furthermore, moralistically preaching the value of education for children makes local school advocates seem like just another interest group – one that has done comparatively well over the past decade – demanding money. After all, don’t the kids on MassHealth “deserve” the best health care? Don’t the kids at UMass deserve an affordable education?

Ed Reform and the Fiscal Crisis

I believe that a key cause of the problem is that local school advocates and state officials fail to appreciate the causes of the problem we face, and its true social and political consequences. This is why there is such a gap between the perceptions of state officials and local reality.

Ironically, it is, to some degree, the generosity of the state that created the crisis. Education reform in the mid-1990s poured billions of dollars into local schools. School districts, understandably, reduced class sizes, raised teachers’ salaries (while costs of pensions and health insurance skyrocketed) and experienced huge increases in the cost of special education. No doubt this increased spending improved education (at least as measured by standardized test scores) and reduced inequities between school districts. This was good. But the spending increases of the 90s have created the fiscal nightmare of today.

In essence, the state of Massachusetts ratcheted up local school district budgets to the point where their “fixed cost” increases for level serviced budgets could not be sustained without constant increases in state aid. But after 1998, these increases were no longer forthcoming. The state, with budget problems of its own, particularly in the area of health care, began to pull back. While education aid continued to fare well compared to other state programs, Chapter 70 payments bore no clear relationship to the natural increases in local school spending. Yet state officials felt they had fulfilled their obligations under Education Reform, and when compared to the rest of the state budget were continuing to act in good faith in providing aid to local schools.

State officials do not seem to realize they have created a giant wrecking ball heading inexorably in the direction of local government. State aid increases, generous as they might have seemed from the point of view of our legislators, left the cities and towns holding a huge burden. And the consequences were constant annual local battles that lasted for weeks, even months, pitting various groups against one another. The problem was not that state aid was inadequate in terms of some dollar estimate of what kids need. The problem was that the state had created a systemic crisis that impacted entire communities.

Our legislators often seem to wonder why poorer school districts that received the most money under Education Reform are now complaining the loudest. But it is precisely because the poorer districts are the ones that received the most aid under Education Reform that they are now the most dependent on state aid, and thus are hurt the most when state aid increases do not match their fixed cost increases. They also tend to be the school districts in localities least likely to pick up the deficit by raising property taxes via overrides. The resulting perennial budget battles and school closings cause many parents to pull their kids out and send them to more affluent districts. Resulting school choice and charter school losses exacerbate fiscal problems, and lead to lower MCAS scores. This dynamic creates a downward spiral affecting the poorest districts the most.

What is to Be Done? 

Well, that is a question that must to be left to the next issue of the Montague Reporter. But the first thing we need to do, in the words of the recovery movement, is  “Admit we have a problem.” The state aid numbers in the governor’s budget are not at all a step in the right direction, but a continuation of the crisis we have been seeing since the end of Education Reform. And there is an almost total disconnect between what we are experiencing at the local level and the perceptions of state officials. 


How to Stop the Fiscal Wrecking Ball

By Jeff Singleton – Part 2 of a 2-part series

Montague Center (March 22, 2007) - Last week I made two basic arguments about public education finance in Massachusetts (Ed Reform Creates a Wrecking Ball, MR V#25). First, there is a huge gap between the perceptions of state officials, including our own state legislators, and the realities we experience in local communities every year. State officials view school aid as perhaps not adequate, but faring well compared with other parts of the state budget. At the local level, on the other hand, we have been experiencing an ongoing funding crisis since the end of Education Reform funding increases in 1998.

The second argument is that the local funding crisis and the perception gap about the funding crisis are, in fact, the product of Education Reform itself. Education Reform, poured billions of state dollars into local schools. This may well have improved education but it also created a fiscal disaster. School budgets were ratcheted up to the point where their annual cost increases for level service budgets far outstripped revenues. The result has not only undermined the education of our children, but created a community-wide crisis that undermines support for public education in local communities.

Now the question is, what can we do about it? The crisis in public education will require a radical revision of the way we localities think and act. The ideas and rhetoric that came out of Education Reform will have to be overthrown, and a new paradigm established. Here are a few preliminary ideas.

Admit You Have a Problem

We need to be clear that the current levels of state aid are helping to destroy local public education. State officials need to stop patting themselves on the back for levels of aid that essentially create annual budget crises. The tendency to view Chapter 70 in the context of the state budget is understandable but misleading. But local officials need to do a much better job of explaining the nature of the problem. We need to stop portraying this crisis in terms of vague conceptions of  “adequacy,” moralistic rhetoric about the value of education, “cuts” in state aid and the like. On both sides, we need to understand the systemic causes of the crisis and its community-wide consequences.

Address Root Causes 

School consolidation (closing schools and creating even larger regional districts) will not solve the problem. This solution does not address the core cause of the budget crisis. Of course we should be willing to look at every aspect of school budgets, including underutilized buildings, and the situation may vary from district to district. But there is little evidence that closing good schools or creating larger districts, as happened in the 1970s, lowers school spending significantly. Furthermore, the divisive battles over school closings produce enrollment declines, choice losses, and undermine community support for public education. If a key problem is “declining enrollments,” school closings are likely to only make the situation worse.

Similarly, fixing “the formula,” the mechanism by which the state distributes aid, will not help, unless the new formula includes an inflation factor linked to a realistic level of local fixed cost increases. Otherwise changing the formula will only produce marginal winners and big losers. It will also produce legislative battles between the haves and have-nots.

No New Programs (until we can finance the old ones)! 

I was stunned to see Chris Gabrielli in Greenfield last week advocating that the local school district extend the school day. The educational rationale for this seems very strong, but the obvious question is, “Who will pay for it?” Greenfield is in the midst of one of its chronic budget disasters, threatening to lay off teachers and close good schools. How can it possibly afford to pay teachers more to work longer hours when their current wage and benefit increases cannot be financed by existing revenues? The idea that a longer day will initially be paid for by a grant from the Department of Education is particularly disturbing. This suggests no long term planning at all, and no awareness of the fiscal problems local communities face.

The extended day proposal is only the tip of the iceberg, however. We constantly hear about expensive new initiatives, without any recognition that we are in the midst of a severe fiscal crisis. Liberals constantly advocate more early childhood education, for example, while conservatives push for more standardized testing and merit pay for teachers. There seems to be no recognition at all that programs like these cost money. Attitudes like these created the burdensome “No Child Left Behind” mandate (and arguably Education Reform itself).

Long term planning between state and local government.

We need to institute long-range budget plans at the state and local level (and then stick to them).  This idea has been advocated in recent publications of the Massachusetts Taxpayers’ Foundation (for the state) and by the Division of Local Services of the Department of Revenue (for local government).  Essentially, the idea is to project revenues and expenditures at least five years into the future, and try to work out a realistic plan for reducing structural budget gaps. It is crucial to stop lurching from year to year, making arbitrary decisions with no long-term plan. Add to this the necessity for an historical evaluation of how local (and state) budgets came into structural imbalance.  Potential solutions to the budget crisis must be based on a reasonable evaluation of root causes.

A key flaw of recent long-term state plans is that they seek to increase the total amount of state spending targeted to local schools. The problem is, this will simply recreate the budget crisis generated by Education Reform, at a higher level. Once again, local budgets will be ratcheted up to unsupportable levels. Any successful plan must move away from this approach, and instead add to the state formula an escalator clause related to the real growth of local school spending. At the same time, state and local governments will need to work together to reduce fixed cost increases.

Taxes 

Right now, state officials are implicitly asking us at the local level to raise property taxes, while they take the possibility of fairer and more progressive state tax increases completely off the table. This is just plain wrong. All revenues must be on the table, part of the mix. On the other hand, some advocates put too much emphasis on raising the state income or sales tax. We must admit that the fiscal gap cannot be solved only on the revenue side. Attempts to raise state taxes without clear efforts to cut cost increases are both political losers and bad policy. State taxes must be on the table, as they in fact are locally. But we cannot tax our way out of this problem.

Wages and Benefits 

Tax increases that simply finance health care inflation will not improve the situation. We need to be able to discuss wages and benefits during the local budget process. They are not entirely “fixed costs” that can simply be ignored because they are part of the collective bargaining process. We should spend at least as much time on health care costs as we do on closing good schools. There needs to be some realistic relationship between negotiated increases and local revenues. But we also need to be realistic: there are serious limits to what can be saved in this area. Teachers deserve (and will in fact receive via arbitration) “step” and “cost of living” increases, as well as health care and pensions. But we can reign in costs more than we have. Allowing local workers to join the state health care plan (Group Insurance Commission) would be a start. Long-term budget planning and honest discussion of the trade-offs would be a step in the right direction.

School Choice

From a fiscal standpoint, the current school choice program is not working. While it may encourage some districts to improve education, it helps create a downward spiral for others. It is simply not fair or realistic for poorer districts to compete for students when they are in a constant state of crisis. Poor districts experience huge budget crises every spring when parents make their decisions. Poor districts close popular schools, lay off effective teachers, cut music and art. Parents choice out to more affluent districts which avoid these extreme cuts. More affluent districts then avoid budget problems of their own through school choice revenues. Has the state evaluated the fiscal impact of this program?

Special Education 

Local school districts cannot afford to fund “special education” out of local property taxes. The numbers just do not add up. You wind up cutting music and art and closing schools to pay for expensive “out-of-district” SPED placements. Current efforts to deal with this problem at the margins (the state Circuit Breaker program) are not working. Special Education is a state and federal mandate, and the state and federal governments should pay for it. Period!

Health Care 

Similarly, it is time to get honest and recognize that we need to break the wall of silence about the need for real cost controls in health care. Health Maintenance Organizations have not worked. Individual health accounts will not do the trick. Opening up the state program (Group Insurance Commission) to local workers is an excellent idea, and needs to be implemented immediately. But without real cost controls, even this important reform will be of marginal value. Rate setting, which the state abandoned in the 1980s, is unfortunately the only way to go. I say unfortunately, because real cost controls come with all sorts of negative consequences. But we are being bankrupted by rising health care costs and radical action is needed. At the very least, we need to start talking about this reality, (rather than pretending that the conservative solution: individual savings accounts) or purchasing drugs from Canada (the liberal solution) will solve the problem.

Think Radical, Talk Radical

We need to think radical and talk radical about this problem. There is a common fallacy that says only politically realistic proposals can be seriously discussed. But if we do not talk about tax increases, cost controls, school choice, special education and reigning in wages and benefits, these things will never happen. It is certainly a good idea to come up with moderate, realistic proposals, like long-term planning and joining the state health plan. But we also need to admit that without a radical restructuring of public education finance, and the way we think about it, the downward slide will only continue, with local property taxes paying an ever larger share of the bill.

Jeff Singleton is chair of the Montague Finance Committee.

Posted by JeffSingleton - April 03, 2007