Wednesday, December 16, 2009

Listening to citizens on facing the crisis in public education finance

As public education faces a financial crisis, I've been trying to talk to citizens, and community leaders, to get a sense of how we on the Board of Education should be approaching our challenges. What I am hearing is that the community expects us to face the reality of the crisis that is impacting employers and employees.

According to an article in the Minneapolis Star Tribune, total wages in the United States are down by 4.5%. In Minnesota, total wages are down 5.5%. Projections for next year’s State budget are for a $1.16 billion revenue shortfall caused largely by a drop in income tax receipts. An estimated 224,000 Minnesotans have lost their jobs since the start of the recession. The Management and Budget office estimates that 90,000 more were forced to take part-time work because of hourly cutbacks at their plants or the inability to find full-time jobs after layoffs. The owners of businesses are living on the edge, many of them worried that they will not be able to keep their businesses afloat. Employees of many of our lunch-bucket companies, printing, machine tools, the construction trades and construction suppliers, have been laid off, and many are fearful that their unemployment compensation will soon expire.

People are telling me that commercial real estate is under stress. There is a glut of unsold residential real estate and we hear pessimists in the residential construction trades contend that its going to take a number of years before the stock of unsold homes has been absorbed by the market.

People are telling me that unions in the private sector are giving back wages and benefits, or turning paid vacation into unpaid vacation, or both. They say that one of the major impacts on middle income workers in the construction trades and manufacturing has been the loss of overtime work. Overtime work pays time and one-half and provides a significant portion of many of these workers' income. The value of many retirees or those who are soon to retire has fallen. Retirees who were invested in stocks suffered terrible losses, although if they held on to their stocks, their values are coming back. Retirees who were invested in "safe" interest bearing investments have suffered a significant loss in the rate of return on various forms of interest bearing savings. The vast majority of Minnesotans who have jobs are thrilled to be employed, and even more thrilled if they are lucky enough to be keeping the wages that they earned last year. Commissions are down for people who work on commission. Bonuses are way down, or completely non-existent, for people who get year-end bonuses. Contractors who several years ago had booming businesses are struggling to keep out of bankruptcy.

On TV, the economists are telling us that we are beginning to see a potential turnaround, but we know that when the turnaround begins, it takes a long long time before the turnaround trickles down to real people.

This places extreme stress on those of us on school boards whose job it is somehow to communicate across the boundaries of education and the rest of Minnesotans. In the rest of Minnesota, people are saying, well, they are lucky to have a J.O.B. People are telling me, "Don't you guys in education know that there is an economic crisis underway?!"

I've often felt that the public would benefit by taking a field trip to the classrooms of teachers so that they can get a better sense of the challenges teachers face. I really do believe that those folks who have never taught, have no idea how hard teachers work, how many extra hours they work, getting lessons ready, grading papers, assimilating new curriculum, and adopting new techniques. There is a gap between the world outside of education that fails to understand and appreciate what goes on in the classroom, and what educators actually do.

But there is a similar gap in understanding about the economic risks and challenges faced by non-public employees and entrepreneurs. In times of recession, I think it might be beneficial for public educators to take some field trips of their own, to talk to laid off employees, to meet with small business owners who are struggling to keep up their leases and loans, to sales people pacing the floor in empty salesrooms, or to visit the homes of middle income workers seeking to balance their budgets under duress. There is a communication gap in education right now, that is clear, and we need to figure out a way to close that gap with a herculean effort to understand each other.

Some school districts have large fund balances accumulated over the years to ride out storms like this. Our school district had a modest fund balance for its size -- $6 million -- in 1999. But in the next four years, the district spent the fund balance down completely, so that by the time that I arrived on the Board of Education in 2004, the fund balance was negative. Now, we hear rumors that the governor may have his sights on school district fund balances as a way of helping the state ride out the financial storm. When I talk to citizens they are telling me that we board members need to make decisions that reflect what is happening here in Minnesota, and if we do not, precious few are going to understand.

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