Editor’s note: This is the first post in a series that puts the themes of 2020’s Getting the Most Bang for the Education Buck into today’s context, with particular attention to the effects of the pandemic and federal relief dollars. Edited by Rick Hess and Brandon Wright, the book features nine chapters by twelve authors. Each entry in this series will draw primarily upon a single chapter.
Last week, President Biden signed into law the $1.9 trillion American Rescue Plan, including $129 billion for schools. That brings the K–12 Covid-19 aid total up to $195 billion. These dollars are important and could do much to mitigate the damage the pandemic has inflicted on American education and students. But they don’t address the underlying fiscal challenges that many school systems face, some of which the virus may have made worse. Even more than they do now, education leaders will have to find ways to spend whatever funds they receive wisely, effectively, and in ways that make a difference. That will likely be more difficult in the future, but no less important.
To be sure, America’s short- to medium-term economic outlook is much better than we thought it would be six months ago. Part of this is due to our K-shaped recovery, wherein the rich have gotten richer, softening the hit to state revenues, while the poor have gotten poorer. Plus the $5.3 trillion in aid that Washington has provided since the pandemic began.
But the longer-term outlook is rough. Even if America successfully gets back to a pre-pandemic normal in the next few years, our schools were staring down a challenging funding future well before the virus arrived. That’s mostly a consequence of fundamental demographic shifts in the American population, as Matthew Ladner explains in his chapter in Getting the Most Bang for the Education Buck. “By 2035, the Census Bureau projects, the elderly will outnumber the young for the first time in U.S. history,” he writes about a phenomenon that the Covid baby bust is poised to make even worse. “The implications are profound for every public service and governmental function in the land, including K–12 education.”
One of the problems is reduced tax revenue, which has also been worsened by the pandemic. “People in their peak earning years pay a lot of taxes, but retirees live on fixed income,” says Ladner. That’s part of the reason why “larger elderly populations correlate with slower rates of economic growth, and thus with slow state revenue growth.” Retirement age in the United States is generally considered to be sixty-five. And for years now and on through at least 2030, an average of 10,000 baby boomers reach that age in our country every single day.
An aging population also increases non-school costs. When Americans reach retirement age, they begin drawing from entitlement programs like Social Security and Medicare—which both “show massive unfunded liabilities and depleting trust funds,” observes Ladner. They also start to pull retirement benefits from public pensions, which today “face large structural deficits despite large increases in required contributions from current employees, including teachers and the school systems for which their work.” Chad Aldeman, in another chapter in the book, quantifies these programs’ collective deficit: “$500 billion in unfunded pension liabilities.”
Faltering revenues and rising costs, however, aren’t the whole story when it comes to determining school funding. It’s also public will, and that, too, is likely to wane. As Ladner writes, “Our public schools enjoyed decades of nearly uninterrupted funding increases—typically gauged in inflation-adjusted, per-pupil dollars—throughout the twentieth century and into the twenty-first.” This, he says, “signaled both the broad economic success of American society during that period and its willingness to invest in its children’s future.” An aging population changes this. Because of the elderly’s fixed income, “they prefer to avoid tax increases,” writes Ladner. Moreover, “the financial interests of the elderly is in health care and pensions, while young adults have a competing demand for K–12 and university investments.” So as a greater proportion of Americans reach retirement age, “continued increases in health spending will put pressure on all other categories of state spending, including K–12 education.”
The federal government’s pandemic relief dollars may reduce the public’s will for greater education spending even further. Some people are going to think that so much money has been dumped on schools—more than they can spend—that there’s surely no need for more state and local K–12 funding. Critics, for example, have already questioned whether schools need the additional $129 billion provided by the American Rescue Plan, after the Congressional Budget Office estimated that much of the money from previous Covid-19 stimulus bills hasn’t been spent. Republican U.S. Senator John Thune of South Dakota used the report to say that it “hardly seems like you can call that ‘emergency funding,’” as Education Week’s Andrew Ujifusa reported. And the Wall Street Journal editorial board, pointing to the same CBO estimate, said that the money “isn’t about Covid relief.... You can bet many districts will also use the money for pensions and higher salaries. The bill is essentially a nearly decade-long subsidy for the unions that supported Joe Biden.... Democrats are using the banner of ‘Covid relief’ not to increase student learning but to reward a Democratic constituency at taxpayer expense.”
It’s hard to imagine substantial further increases in school funding across the country when leading Republican voices already say they’ve received too much. Even though the public tends to like boosting education dollars, many Republicans don’t, and they remain in power in a majority of states, and could easily come back into partial power in Washington in 2022. Moreover, if all of this spending starts to lead to inflation, interest rate hikes, or tax increases, the appetite for additional spending might disappear.
Getting the Most Bang for the Education Buck is about identifying insights, lessons, and suggestions that can help schools use their funds effectively in whatever spending environment they find themselves. This environment is challenging today and unlikely to improve in the future. It’s vital, then, that state, district, and school leaders budget smartly and carefully in the years to come. They should start by using Covid-19 relief dollars to improve learning and get kids back on track after suffering substantial learning losses, but do so without creating expensive new obligations. Otherwise, within a few short years, they will push their schools off a fiscal cliff of their own creation.