Federal Funding and Equalizing Educational Resources

Real education reform would entail making sure every child has the teachers, books, aides, and resources he or she needs, not a byzantine testing regime designed to replace older teachers with younger TFA members. Instead, with charters, in some cases, taking resources from the neediest students and too many states where those students with the least get the fewest resources, we do the exact opposite. A key element of Massachusetts educational surge in the 1990s was its funding equalization component programs which have been shown to dramatically increase educational testing performance and other outcomes.

So it’s heartening to see Democratic presidential candidate and Senator Bernie Sanders state this (boldface mine):

“One of the things that I have always believed is that, in terms of education, we have to break our dependency on the property tax, because what happens is the wealthiest suburbs can in fact have great schools but poor, inner-city schools cannot. So I think we need equality in terms of how we fund education, and to make sure the federal government plays an active role to make sure that those schools we need it the most get the funds that they deserve.”

The federal component is key. Unlike state and local governments which would have to cut other programs, raise taxes, or borrow, the federal government is not dollar constrained: it issues currency. At the federal level, a lack of currency should never be a limitation (this might be a familiar theme for regular readers…). Dylan Matthews at Vox (?!?) explains (boldface mine):

In theory this problem could be solved at a state or local level; all that research relies on past state efforts to equalize funding, after all. But the bias toward the rich introduced by the property tax system makes state and local reform difficult. State funding has to actively work to counteract this bias, and that redistribution causes resentment from affluent towns whose residents vote more and donate more to local politicians than do residents in poor communities.

What’s more, states don’t have the luxury of running continuous deficits the way the federal government does. They can’t print their own money, and all but Vermont have some kind of balanced budget requirement. So getting enough state funding to give poor districts a leg up is a tall order.

…The big reason that states shouldn’t, in general, be trusted with social programs of consequence is that they can’t run deficits. They have to pay for every dime they spend right then, and that in practice tends to necessitate program cuts during economic downturns, when tax revenues fall as people spend less, property values tank, and incomes plummet. At least 30 states cut per-pupil education spending after the Great Recession; Oklahoma led the pack with a whopping 23.6 percent cut, with Alabama and Arizona following closely. Overall per-pupil spending across the US fell as well, breaking a trend of more than a decade.

By contrast, it’s customary for the federal government to run larger deficits during downturns. Stimulus packages, like the large one President Obama signed and the smaller one President Bush signed the year before, are normal and often, as in the case of Obama’s, include education funding support for states. That helps stanch the bleeding caused by state-level cuts, but was hardly a full replacement.

If all spending were federal, there’d be no similar pressure to cut. The government could simply run a deficit and keep funding education as usual.

If you’re worried about inflation or other asset distortions (curiously, this never seems to be a concern when a couple hundred billion dollars of tax cuts are on the table…), then we can raise taxes on the wealthy–something Sanders has also proposed.

I’m ready for real education reform.

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