Who Pays When Public Schools GO PRIVATE?

Who Pays When Public Schools

GO PRIVATE?

When Bobby Jindal preaches budget cutting, and the shrinking of government, he’s reading directly from the American Legislative Exchange Council play book.  He scores well with ALEC when he moves to privatize prisons, or his own Office of Group Benefits; and when it comes to education, his program of tax credits, vouchers, charter uncapping and expansion, and common core standards earn ALEC gold stars for success.

In 2002 ALEC reported on its success in a report entitled “Show Me the Money.”  The most aggressive budget cutting has been in the Midwest, a region particularly hard hit by the economic downturn.

Illinois Governor George Ryan proposed over half a billion dollars in cuts, including closing a medium-security prison, shutting down a mental health center, reducing college scholarships, and paring down state aid to schools.

In neighboring Iowa, Governor Tom Vilsak signed a budget that included furloughs for state workers and eliminated or suspended 27 state programs.

In Michigan, Governor John Engler cut about $1 billion in discretionary items, including bilingual education, parenting skills training, and youth violence prevention programs.

All of this wreckage purportedly would stir great economic advantages to these states.

Let’s take a look at what happened in these three states:

Illinois:  Total employment peaked in June 2007 with 6,057,600 employed.  Since then 379,900 jobs have been lost.  Over the past three years state tax collections have fallen from $29.1 billion, to $26.8 in 2009, and $24.5 billion last year.

Iowa: In 2000 total employment numbered 1,557,100, while in June of 2011 the employment numbered 1,576,100.  Iowa’s tax revenues were shrinking over the past decade, politicians of both parties advanced corporate tax credits that have “severely and increasingly cut into state revenues,” according to a report by the Iowa Fiscal Partnership (IFP). It is forecast that between fiscal years 2009 and 2014 existing corporate tax credits will result in a loss of $600 million in revenue. Additionally, various tax loopholes have allowed large out-of-state corporations to transfer profits from Iowa to their subsidiaries in states without corporate income taxes, amounting to a loss of $60 million to $120 million in corporate tax revenues every year, according to the IFP.

Michigan:  The trend line in labor force steadily declined from nearly 5.2 million in 2000 to just over 4.25 million employed in 2011. Unemployment in 2000 was less than 200,000 and in 2011 stands at 500,000.

ALEC clearly has a business-favorable agenda that is mainlined into those legislators who are attracted by the benefits that ALEC offers.  A significant part of the ALEC agenda is tax reduction.  The argument is that cutting taxes, particularly business taxes or taxes on higher income business leadership, will spur economic activity and create jobs.

The U.S. Census reports that the median income in 2007 was lower than it was in 2000.  The non-partisan Center on Budget and Policy Priorities reports employment growth was lower than in any previous post-World War II expansion, with job growth of only nine-tenths of a percent from November 2001 to September 2007.  Real wages for that same period grew at a 1.8 percent average annual rate.  Hardly evidence that tax cutting spurs economic development.

The Laffer, trickle-down, economics appears not to have been effective in growing jobs.

The second round of tax cuts under Bush in 2003 was a bit more faithful to the supply-side cause. The second round involved a reduction in the tax rate on both capital gains and dividends to 15 percent, with the dividend cut being particularly large. But even so, as the statistics above on income and employment growth attest, there wasn’t much evidence that these tax cuts had a large impact on economic growth or job increases.
ALEC’s priorities for the 2011 session included bills to privatize education, break unions, deregulate major industries, pass voter ID laws and more. In states across the country they succeeded, with stacks of new laws signed by GOP governors like Ohio’s John Kasich and Wisconsin’s Scott Walker, both ALEC alums.

ALEC’s most ambitious and strategic push toward privatizing education came in 2007, through a publication called School Choice and State Constitutions, which proposed a list of programs tailored to each state. That year Georgia passed a version of ALEC’s Special Needs Scholarship Program Act.  Most disability organizations strongly oppose special education vouchers, and decades of evidence suggest that such students are better off receiving additional support in public schools. Nonetheless, Louisiana, Oklahoma, Florida, Utah and Indiana have passed versions of their own. Louisiana also passed a version of ALEC’s Parental Choice Scholarship Program Act (renaming it Student Scholarships for Educational Excellence), along with ALEC’s Family Education Tax Credit Program (renamed Tax Deductions for Tuition), which has also been passed by Arizona and Indiana. ALEC’s so-called Great Schools Tax Credit Program Act has been passed by Arizona, Indiana and Oklahoma.

Julie Underwood, dean of the School of Education at the University of Wisconsin, studied the ALEC education agenda and concluded:  A key component consisted of chipping away at local school districts and school boards through its 2009 Innovation Schools and School Districts Act and more. Proposals like the Public School Financial Transparency Act and School Board Freedom to Contract Act would allow school districts to outsource auxiliary services.

ALEC’s real motivation for dismantling the public education system is ideological—creating a system where schools do not provide for everyone—and outcomes are profit-driven. The corporate members on its education task force include the Friedman Foundation, Goldwater Institute, Washington Policy Center, National Association of Charter School Authorizers and corporations providing education services, such as Sylvan Learning and the Connections Academy.

Public schools are not merely schools for the public, but institutions where we learn what it means to be a public and start down the road toward common national and civic identity.  What happens to our democracy when we return to an educational system whose access is defined by corporate interests and divided by class, language, ability, race and religion?

Underwood asks, in a push to free-market education, who pays in the end?

Don Whittinghill

Consultant

8/8/2011