Living beyond our means

by folkbum

One of the most common complaints from the right about the current budget morass is that schools (and other units of government) have been "living beyond their means." So let's talk about that.

I attended the Organizing for a Better Way meeting put together last Saturday by the Wisconsin Alliance for Excellent Schools and other groups (earlier mentioned here). Four hundred other people and I listened as speaker after speaker--from teachers to school board members to students from all around the area--described what the impact of a billion-dollar cut in the state education budget might look like.

Not one of them talked about how much schools were living it up before now, and how sad it will be to see the party end. No; every single speaker talked about what had already been lost to cuts to this point, and how additionally devastating a deep cut in the revenue limit, as proposed by Governor Scott Walker, would be.

None of the speakers made this point better than Greenfield Public Schools Superintendent Conrad Farner, who delivered a barn-burner of a speech. It was, indeed, quite a shocker to hear a superintendent, any superintendent, so baldly honest about the budget situation as Farner was Saturday. I could barely keep up taking notes, what with having to stop to applaud every other line with the rest of the audience.

Farner gave the room a history of the last two decades living under the regime of revenue limits set by Madison. For those who don't know how that works: the total amount of money a school district can spend, per student, is capped by state law as a way of protecting local taxpayers from runaway local officials. How much a district's cap is varies around the state; the formula considers everything from how much you spent last year to how much property wealth and state aid your district has. The result of this policy is the remarkable fact that Wisconsin's per-capita state and local tax burden is the lowest it's been in 50 years.

But here's the kicker, as Farner laid it out. Not once in the last two decades has the revenue cap increased at a level equal to the increase in the cost of providing services. Every year for 18 years, Farner said, virtually every school district in the state has had to make decisions about where to cut, and Farner read a stunningly long list of services Greenfield used to provide and now doesn't, from summer school to social workers. He talked about concessions Greenfield teachers have already made in pay, pensions, and insurance. "We can't cut our way to excellence," he said, and yet next year, under Walker's proposed budget, the cuts would be the deepest yet.

Now it is true, as will undoubtedly be pointed out here in the comments section within minutes of this post hitting the presses, that in real dollars the amount of money every school district spends today is higher than it was in 1993 when the caps started. (Complaints about the caps started at about the same time; here, for example, is a press release (pdf) about a 1998 study of revenue limits and their effects on schools.) This is because the rate of increase allowed by state law has been greater than zero (Walker proposes for the first time ever under the revenue cap system a negative number). However, that rate has been slower than the rate of increase in the cost for school districts to offer all the services they want and need to.

This harkens back to a point I have made many times before, and undoubtedly will have to again. Even in times like the present, when inflation is dramatically low, the cost of doing what schools do can still increase. This is because what governments buy--the cost of government services--is very different from what families buy--the costs underlying the rate of inflation. While people and families buy food and clothes and iPads, governments buy roads and tanks and people; governments' cost of living is a different animal than families' cost of living. To try to compare the two, or suggest that governments ought to budget more like families, is a real apples-to-oranges kind of exercise.

But back to the point: Even when the things governments buy, notably people and their health care (the inflation rate of which far outstrips CPI generally), get more expensive, in Wisconsin school districts and other local units of government are prohibited by law from raising revenue to pay for them.

Another way: If you really want to compare governments to families, Wisconsin's revenue limits mean that Dad can't go look for a better-paying job, Mom is not allowed to go back to work after taking some time off to have kids*, and Junior can't pick up a paper route to pay for his own damned comic books.

(* The vagaries of the revenue cap formula include a provision that any decrease in the property tax levy one year penalizes districts in future years because it lowers the revenue cap not temporarily but permanently.)

Or another way, which is how Farner framed it over the weekend: "What business," he asked, "could survive for 18 years with its revenue capped below its cost?" Imagine, as I explained it to someone the other day, that McDonalds wasn't charging enough for its hamburgers to cover the cost of the food, the stores, the employees it had and was prohibited, by law, from raising prices. That would be insane--but that is the situation we're in now.

No, it's worse. The situation we're in now is that McDonalds has closed stores, laid off employees, switched to cheaper ingredients, and is now being told that it has to roll back the prices on its menu anyway and somehow stay afloat.

In the end, I don't think there's a single honest observer who can look at the economizing schools have done in the face of increased costs, increased testing, increased uncertainty about the future and say that schools have been living beyond their means. Their means, indeed, have been capped, making living beyond them impossible. Impossible, like the task Conrad Farner and other school officials have now to find something, anything else to cut.