The Shell Game

True story: When I was young and stupid (I may still be stupid--watch this space for updates), I actually lost $20 to some guy on the El in Chicago running the shell game. Really. I had just finished a college class called "The Art of Magic" and I thought I was invincible in those sorts of things. But, as it turns out, I was not.

The moral of that story? Don't play the shell game. Ever. You can't win.

News has been dripping out slowly from Wisconsin Governor Jim Doyle's Task Force on Educational Excellence about what their recommendations will be, set to be officially released at the end of this month. To get everybody up to speed, here's what the task force was charged with:

1. Study and make recommendations regarding the cost of providing a great education to every child in Wisconsin and determine the level at which Wisconsin citizens are prepared to fund that education; and
   
2. Review how the state funds education through a combination of state and local taxes, and make recommendations regarding what proportion of these two taxes is fair and reasonable to fund public education. In making recommendations, consider the constitutional requirement for equal opportunity, local control in decision making, and the effect of financing systems on property and other tax rates; and
   
3. Study and make recommendations on how to improve the state’s ability to attract, recruit, train, and retain high quality teachers so that every child and every classroom has a highly qualified teacher, including ways to increase compensation to attract our best young students to the profession, keep our experienced teachers in the profession, and align our best teachers with the toughest challenges; and
   
4. Consider and recommend ways to adequately fund special education, including ways to share special education costs more evenly across the state, while assuring that public education is available to all; and
   
5. Review existing barriers to academic achievement in Wisconsin and make recommendations to ensure that every student has an equal opportunity to a great education, regardless of location, disability, language barriers, and economic situation; and
   
6. Study Wisconsin’s current investments in early childhood education and recommend ways to make other early investments in education to increase student achievement and accomplish other positive long-term results.

That's a very broad mission, but I think that, in particular, number two is the one everybody is watching. I think that's very short-sighted to focus so much on that.

I've written quite a bit lately about Wisconsin's overall property tax situation, mostly in regards to TABOR and the potential resurrection of the property tax freeze. One of the major results of such intense focus on the property tax issue over the years in this state is that everything ends up being about property taxes. It doesn't matter of we're talking schools or health care or casino gaming--at some point, the politicians in this state have to relate it to property taxes.

Now, I admit, the property tax in Wisconsin is high. When Sarah and I were buying our house last year, we were showing off the info about it, and our family from out of state took a look at the property tax total and expressed disbelief. But you have to remember that Wisconsin does not collect as much in usage fees as other states. When you look at the combined total of all taxes and fees, Wisconsin doesn't even make the top half. Here's a .pdf (couldn't find an html source, sorry) that says, in part (emphasis mine),

Wisconsin ranked 18th in total state and local spending in 2000, according to an analysis of data released in mid-December by the U.S. Census Bureau. The Center on Wisconsin Strategy and Wisconsin Budget Project analyzed the new Census Bureau data and compared Wisconsin's spending and taxes with those in other states. They looked at per capita measures of state and local financing, as well as tax and spending levels relative to income.

"What may surprise some people is that despite Wisconsin's relatively high tax ranking we are much closer to average in spending," stated Jon Peacock, director of the Wisconsin Budget project, which is part of the Wisconsin Council on Children and Families. "The reason for that apparent paradox is that Wisconsin relies less than most states on non-tax revenue, such as fees, and we also receive less federal funding," Peacock noted.

The analysis of the Census Bureau data shows the following about state and local spending and taxes in Wisconsin:
• Wisconsin ranked 8th highest in per capita state and local taxes, and 4th highest in taxes as a percentage of personal income.
• In the category of total state and local taxes and other non-federal income, measured as a percentage of income, Wisconsin ranked 13th.
• Wisconsin was 30th in state and local fees, as a percentage of income and 35th in federal revenue.

Those first couple of bullet points have got to look really bad, but when you factor in user fees, we do okay. And even the property tax is not so awful: The Wisconsin Taxpayer's Alliance noted that we are paying less right now as a percentage of personal income than at any time since 1981.

But the governor's task force ended up focusing too much on the property tax, to bring us back to the supposed topic of this essay. And, of course, once word got out about the likely solution, the local daily sensationalized it in the headline:
Sales tax boost urged to fund schools
Task force plan would cut property taxes 20%

Yes--the task force is recommending substituting the second most regressive tax (the sales tax) for the most regressive (the property tax). But the thing is a little more complicated than that, and it makes it not quite so bad as I just made it sound. I was able to catch a little bit of discussion on Wisconsin Public Radio over the last few weeks, both with task force Chairman Michael Spector and Mark Bugher, whose plan the tax-shift was. As it turns out, according to their descriptions of the proposal, the property tax relief will roughly follow the state's equalization formula. That means property-poor districts, which get more state aid in equalization dollars, will get more property tax relief, and those property-rich districts won't. This to me seems the inverse of what it could have been (pay more, get more back), but in the end I think it's fairer. Milwaukee property taxpayers, for example, will be taxed to the limit next year, while some wealthier suburban districts will not be close to the revenue caps. I also must give the task force credit for recommending, though not with specifics, that many services and goods that are currently not taxed be taxed (excluding food, medical care, and other necessities).

In other words, this isn't the worst thing in the world. But the focus is way off. Everyone's fixated on the tax angle--which, from what I've heard from people sitting in on the task force's meetings, consumed the bulk of the task force's work--and that leaves some of those other charges unfulfilled.

For example, number four, above, is inadequately dealt with from what I've seen so far. The only proposal on the table is to increase aid to districts for "high-cost" special education students. Special ed kids who now may cost 150% or even 200% of the average may not qualify under a final definition of "high cost." Part of why Milwaukee is in such dire straits is that we educate more special education students than any other district in the state. (We also have more students in poverty, without health care, and learning English as a second language, but that's beside this point.) When we are funneling more resources to those students, the resources become unavailable for the regular classroom.

Number three, attracting and retaining teachers, is addressed with the idea of repealing the QEO. The QEO was enacted as part of a suite of reforms more than a decade ago in an effort to--guess what?--take pressure off of property tax payers. The idea is that a school district can, unilaterally, impose a 3.8% increase in salary and benefits without contract bargaining. This is dangerous, as it precludes bargaining on other contract issues. It's also dangerous as it means, in some cases, teachers have been forced into salary reductions or even give-backs to maintain their benefits. This is due to the political impotency we seem to be suffering at all levels of government when it comes to health care--those costs are increasing at well above the rate of inflation, and it becomes very hard for any employer, public or private, to keep up.

But the task force has not, as far as I can tell from my reading and listening, made any move on health care issues. Granted, this was not an explicit charge, but there cannot be real improvement in the school funding situation without addressing it.

But mostly, I think it is number five on that list above that is most critical. Surprisingly, the newspaper agrees with me. This is from the lead editorial this morning:

How much does an adequate education cost, and does the new financing mechanism meet that cost? It appears, notably, that the committee would retain the equalization formula the state uses for doling out school aid--a formula that several have-not districts say shortchanges them.

With such a narrow focus on mere tax issues, the bigger (some might say philosophical) issues have been sidelined. There's been no attempt from the task force, it sounds like, to do anything to address the equalization formula, which does not adequately do the job.

I'll give you a very personal example: The Milwaukee Public Schools receives more state aid per student than any other district in Southeastern Wisconsin (mostly because we collect the least in property taxes per student). Yet, even after that equalization aid, we are able to spend $700 less per student compared to those same districts, on average. Without even getting into how much that litany of sorrows I listed above cuts into our per-pupil spending, think about this: If MPS had that $700 per student, we would not be in the the situation we're in now: We're looking at laying off another 300 teachers this year and jacking the tax levy to the maximum to keep the rest. There will be other deep, painful cuts, too, I'm sure. Why? Well, we're at about a $24 million budget shortfall this year. (The past few years we have regularly been between $20 and $40 million short). But if we had that $700 per student, there would not be a shortfall--there would be nearly a $50 million surplus.

That's right--it's not waste, or greedy teachers, or fraud, or abuse, or whathaveyou that is putting MPS into the position of having to lay off hundreds of teachers a year for the past few years--it's that our students are, apparently, not worth the same amount as the students in the suburbs.

I don't want to suggest that suburbs should give up their money--far from it. It's theirs and they should keep it. But what kind of signal does it send to the rest of the nation that Wisconsin feels its African American students (and MPS educates more than 2/3 of Wisconsin's black children) are not worth what their white counterparts are? Is this perhaps one reason why Wisconsin has had the lowest graduation rate in the nation for African Americans three years running?

I don't want to get into the old argument about whether throwing money at a problem, particularly education, solves the problem. That's something ideological and reasonable people may well be able to disagree about it. But I have to believe that we can all agree that the more than 1000 teachers we've lost in Milwaukee in the past five years, the art and music and PhyEd programs we've had to cut, the school nurses we have been unable to keep--that's got to hurt. I don't care where you sit on the ideological spectrum, you can't honestly deny that these cuts are painful and do nothing to help educate our kids.

It is here where the governor's task force could have been bold. They could have figured out how to staunch the bleeding in Milwaukee and other poor districts. They could have shamed the legislature into finally doing something about health care. They could have dealt more adequately with the challenges of educating all special needs students, not just the really expensive ones.

Instead, they gave us a shell game with taxes. And you can't win at the shell game.