December 7, 2019

Public School Cronyism is Fueling the Pension Crisis

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Prior to running for the U.S. Senate in Massachusetts, a Harvard Law professor named Elizabeth Warren published what is widely regarded as one of the best studies of personal bankruptcy ever compiled, The Two-Income Trap.
In it, she showed that the most common reason American families go broke is not taking too many trips to the mall or some other stereotypical profligacy, but underestimating what it takes to afford pricier houses in towns with better public schools. Thinking they can pull it off by having both spouses work, couples overlook how much of their added income will be eaten up by daycare, another commuting car, higher income taxes, and the other costs of a second earner.
As her subject was bankruptcy, Warren was naturally more interested in the fate of families who fail to survive pricier zip codes than of those who manage to hang on. But the latter group turns out to have had a much greater, if widely unappreciated, influence on how American public education functions.
The effect of so many families treading water in order to live in superior school districts is perhaps best described with the phrase “school booster cronyism.” That means the tacit agreement between financially stretched parents and public school teachers to game local education to their mutual advantage, showing only as much concern for the larger taxpaying public as necessary.
Under the guise of improving the quality of instruction, parent-dominated boards of education, PTAs, and other community groups tolerate increasingly generous compensation packages for teachers and school administrators, as well as flexible work rules and lax financial oversight. In return, educators deem an ever-expanding number of extracurricular activities and family services as “educationally necessary,” providing them at low to no cost.
These include taxpayer subsidized daycare, eclectic sports programs, holiday “socials,” inexpensive summer camps run out of public school buildings, and a variety of student perks, such as pottery and ballet lessons, cafeteria pasta bars, and media centers with state-of-the-art video equipment. It is not unusual for suburban high schools outside of major cities to have as many electives as a small college, with for-credit courses in jewelry making, computer animation, and the history of television.
While it’s easy to mistake this parent-teacher backscratching for the kind social harmony that community newspapers exist to brag about, school booster cronyism has long triggered the resentment of residents who either have no children or who pay after-tax dollars to educate their own through homeschooling, private academies, and online curricula. From their perspective, the ever-growing cost of local K-12 education is a thinly veiled racket designed to exploit primarily themselves.
Exactly how much is extracted from households without district children is hard to calculate, but a little math on typical numbers for affluent communities illustrates the complaint. A family paying, say, $10,000 annually in local property taxes and sending three children to public school at a per pupil cost of $9,000 nets a yearly gain of $17,000 in goods and services from the larger community.
Even among public school parents, some gripe privately about district priorities, which almost always favor mainstream pupils at the expense of exceptionally talented students and those with learning disabilities. Other parents are disappointed to discover that their higher status zip codes are no guarantee of higher academic standards.
As far back as 2005, the Yankee Institute for Public Policy looked at every school district in Connecticut, comparing per pupil costs to student scores on state administered mastery tests. It found that affluent communities with reputations for superior schools were in fact spending “much more than middle class towns for the same educational outcomes.”
Four years later, the Pacific Research Institute studied many of California’s supposedly better public school systems, including those in Newport Beach and Capistrano, only to find more than a dozen districts where 50 to 80 percent of students lacked proficiency in grade-level math. And according to College Board research reported in 2017 by Atlantic Monthly, the biggest scholastic advantage of attending school in wealthy districts is not the quality of instruction, but the tendency of teachers to give higher grades for mediocre work.
The problem for all these dissatisfied sub-groups is that over time school booster cronyism has produced some very effective techniques for silencing would-be critics. These include everything from packing public hearings on district budgets with vocal sympathizers to, as University of Missouri professor J. Martin Rochester puts it, “collectively demonizing” those who complain too loudly about how the schools are run.
As suggested by the title of his book, Oversold and Underused: Computers in the Classroom, Stanford professor emeritus Larry Cuban believes that administrators in affluent districts have become adept at using the latest technology to create a “leading edge” aura without making any real academic improvements. If they wanted to, he says, “curricula, teaching methods, and schedules [could easily] be customized to meet the learning styles and life situations of individual students” and “coursework from the most remedial to the most advanced [could] be made available to everyone.” But such advances are rarely, if ever, implemented.
Parent-teacher cronyism in affluent communities even helps to protect dysfunctional schools in poor and minority districts by shielding them from constructive criticism. As the famed social critic Upton Sinclair noted more than a century ago, no reform movement in the U.S. ever succeeds without the participation of middle- and upper-middle class taxpayers. Unfortunately, the same upscale parents who today think nothing of marching for LGBTQ rights, gun control, or green energy would ever risk being tagged as “anti” any form of public education, even the worst.
As powerful a social force as it is, school booster cronyism does have a vulnerability, one that American voters are only just beginning to appreciate. For while the self-serving alliance of public educators and opportunistic parents in affluent communities can almost always muster the local support it needs to pass annual school budget increases, there is a practical limit on how much more can be asked of taxpayers in a given year. And when the cost of satisfying both factions’ priorities comes up against this limit, the temptation has always been to seek out other monies.
Bonding against a presumably more prosperous future has always been one option, but one that had to be used sparingly, lest cumulating debt for operating purposes ever become an argument for less school spending. High operating debt would also make it more expensive to borrow for school roof repairs, classroom renovations, and other capital improvements. As a result, even well-to-do school districts have habitually resorted to the same irresponsible budget practice long employed by less wealthy communities: deferring or skimping on promised contributions to the teacher pension fund.
How exactly this practice became routine has varied from state to state, depending on statutory constraints. But in each case, local taxpayers were encouraged to ignore their cumulating obligation to retired educators, while educators themselves were legally assured that their pensions would remain backstopped by future levies.
One widely used gimmick, only recently checked by the Government Accounting Standards Board (GASB), was to overestimate how much a pension fund could grow from its own investments, effectively lowering the amount that school districts had to contribute each year. A very different custom involved a state legislature agreeing to cover all of its districts’ retirement costs with money from sales, income, and other taxes. In this way, local voters were lulled into thinking they had no liability when capitol lawmakers themselves shortchanged teacher pensions to free up money for other spending.
Of course, the danger with any such accounting ploy is that there could theoretically come a time when underfinanced benefits could no longer provide for the number of teachers stepping down—which is exactly what has begun to happen in recent years. Caught between a cumulative $5.96 trillion in state and local pension liabilities (overwhelming for teachers and school employees) and a simultaneous explosion of Baby Boomer retirements, a growing number of school districts now find themselves under pressure to make up for decades of retirement fund neglect.
This is, in fact, a looming problem for taxpayers everywhere, especially in California, Colorado, Connecticut, Illinois, Kentucky, Massachusetts, Minnesota, New Jersey, Pennsylvania, and other states with above average pension deficits. But it has also become a problem for school booster cronyism itself, as the two factions long accustomed to divvying up local tax revenues suddenly find themselves in an unfamiliar struggle for scarce resources.
Already in California, where local spending to make up for underfunded pensions has tripled in recent years, teachers and administrators are unwilling to make even the slightest financial sacrifice to preserve low-cost daycare, small class sizes, school-based summer camps, or any other family perk. Noting a similar resistance across the country, the Manhattan Institute’s Nicole Gelinas has taken to warning would-be home buyers that they should discount list prices by the increase in real estate taxes needed to fully fund promised educator benefits.
For their part, public school parents have begun taking the previously unimaginable step of demanding forensic audits of their respective districts. From Santa Fe, New Mexico, to Allentown, Pennsylvania, to Berkeley County, South Carolina, families are attempting to identify enough waste to sustain at least some of the non-academic programs they’ve become accustomed to.
This growing split between parents and educators is likely only to deepen as the pension pressure on district budgets exposes decades of administrative fraud and abuse. As Heritage Foundation senior policy analyst Jonathan Butcher has observed, the historical tendency of education boards to indulge lax accounting standards has been an open invitation to racketeering—everything from pilfering field trip money to payroll padding to massive kickbacks for expensive school services such as insurance and heating oil. And while the possibility of such corruption has rarely bothered parent-run civic groups in the past, the coming excavation of wrongdoing will make any reconciliation difficult.
Even the most well-intentioned pension solutions from both left- and right-wing policy groups seem to just aggravate the situation. In Connecticut, for example, a recent proposal by civil rights organizations to generate savings by consolidating the administrations of big city schools with those in adjacent districts quickly prompted suburban parents to mobilize against it. They feared that any kind of regionalization would give cities the same financial leverage over suburbs as they themselves now enjoy over local taxpayers without kids in school.
And while the Left has been pushing school consolidation, think tanks on the Right have been showing parents how to solve their pension problems with modest school choice programs targeted to special needs, uniquely talented, and other student populations. A 2014 report by the EdChoice Foundation, which examined the 10 largest school voucher programs in the United States, found that each participating student saved his or her community an average of $3,400 annually. Two years later, another fiscal analysis by EdChoice—this time of 10 programs in seven states that allowed tax credits for private schooling—revealed identical economies. Unsurprisingly, teachers unions remain dead set against any program, however limited, that sends public funds to private schools.
For decades, affluent school districts have been characterized by self-serving alliances of parents and teachers, who use the system to achieve non-academic goals. No doubt this collusion goes back to a time when farsighted parents joined forces with educators to persuade the rest of their neighbors to subsidize universal schooling—but that goal was achieved long ago. Today, the ill-advised willingness of both factions to spend money that was promised to pension funds has finally backfired…with fiscal, political, and educational consequences that no one can predict.
Dr. Lewis Andrews was executive director of the Yankee Institute for Public Policy at Trinity College from 1999 to 2009. He is writing a self-help book based on the spiritual wisdom of America’s early college presidents.

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