These days, there is plenty of wrangling over the future of
America’s woeful traditional public schools. Inside the Beltway,
congressional Republicans, Senate Democrats, and President Barack
Obama are in a stalemate over the reauthorization of the No Child
Left Behind Act. Obama will also have to defend his school reform
legacy against any one of the Republican presidential aspirants who
becomes the nominee (who, in turn,
will have to distance himself from the school reform mantle of
George W. Bush, upon whose efforts Obama has built his own).
In
statehouses throughout the country, school reform outfits such
as StudentsFirst — the one million member organization started in
2010 by legendary (or infamous) former Washington, D.C. school
chancellor
Michelle Rhee — are sparring with affiliates of the National
Education Association and the American Federation of Teachers over
expanding school choice, and overhauling the system of teacher
compensation that has imposed a $1.1 trillion burden on
taxpayers.
There are the emerging cadres of
Parent
Power activists who are pushing against traditional school
districts for the passage of Parent Trigger laws,
which allow a majority of parents to petition for the
overhaul of failing schools, and the end of zoned school
policies that restrict school choice. Families in the Los Angeles
suburb of Lynwood are already
tangling with the AFT local there (which has all but called the
parents
dupes for “pro-charter heavy hitters”). Meanwhile school reformers will battle with teachers’
unions at the polls over efforts to recall Wisconsin Gov. Scott
Walker (who successfully abolished collective bargaining and forced
dues payments by teachers to the two unions), and roll back reforms
in states such as Idaho.
But the next front in the battle
over schools will involve the most-unlikely of players: The Centers
for Medicare & Medicaid Services. As with the traditional
teacher compensation and defined-benefit civil service pensions, it
is the high cost of decades of dealmaking — this time between
states and the federal government — that will put teachers’ unions
and other defenders of traditional public education on the
defensive.
Thanks to economic malaise that
is now in its fifth year, the job losses and lack of new employment
activity that has accompanied it, and a 15 percent increase in
dependents between 2008 and 2010, Medicaid is the fastest-growing
cost center in state budgets. States’ Medicaid expenditures
(excluding federal matching subsidies) increased by 10 percent
between the 2008-2009 and 2010-2011 fiscal years, according to an
analysis of data from the National Association of State Budget
Officers by education news magazine Dropout Nation. That’s
nearly ten times the increase in overall state spending during that
period. (State tax collections, on the other hand, declined by two
percent during that same period.)
Federal stimulus dollars have
offset some of those costs. But those dollars are no longer
available. So states now have to bear the full brunt of their
mandated share of Medicaid spending. An even more costs are coming.
The Affordable Health Care Act will increase Medicaid roles by as
much as 32 percent in one year (and, if the experience of failed
experiments in Tennessee and Massachusetts are any guide, even more
than that). Add in the retirements of Baby Boomers (who, along with
the developmentally disabled, account for 70 percent of all
Medicaid expenditures) and suddenly, Medicaid will weigh more
heavily than ever on state budgets (and, ultimately, the taxpayers
who finance them).
States have spent the past three
years coming up with gimmicks, from restricting the number of new
beneficiaries to cutting reimbursements. Still, 18 states spent
more on Medicaid than they originally budgeted during the 2010-2011
fiscal year, and six states — California, Georgia, Colorado,
Maine, Maryland, and North Carolina —were running over budget this
fiscal year.
Even more cost-cutting efforts
are on the way. In Florida, Gov. Rick Scott is already proposing to
reduce the state’s $21 billion Medicaid budget by $1.7 billion,
largely through reducing reimbursements to participating hospitals
and doctors.
But as seen in California, where
hospitals and pharmacists have
successfully sought a temporary injunction against the Golden
State’s efforts to hold back $623 million in reimbursements,
Medicaid cuts aren’t going over well with the healthcare industrial
complexes that have become dependent on them. Nor do governors or
legislators want to tangle with either retiring Baby Boomers (who
will soon take advantage of Medicaid benefits — and are an
important voting bloc to boot) or with families of children and
adults with Down syndrome (whose plights make for the kind of
campaign fodder that ends political careers).
So states are scouring for other
areas to cut costs — and ring up revenue. California’s legislators
found $5 billion in future annual revenues late last year when
they passed a law abolishing local redevelopment agencies, which
have become far more notorious for using property taxes for
subsidizing money-losing convention center and shopping center
schemes than for fulfilling their original purpose of promoting
economic development. But few states can easily find such dollars
in a fell swoop — and taxpayers are no longer willing to pay
higher taxes.
The Medicaid costs come on top
of other burdens with which states must wrangle. States scrambled
to shore up $95 billion budget shortfalls for this fiscal year —
and given the underestimates in Medicaid growth, may end up having
to make additional cuts during the fiscal year. They must come up
with enough budget cuts (or efficiencies) to address at least $40
billion in shortfalls that will likely appear in their 2012-2013
budgets. Add in the long-term burdens of civil servant pensions and
unfunded retiree healthcare costs
Facing such struggles,
cost-cutting governors and legislators are now targeting education
spending, one of the few cost centers that have been largely spared
from cost-cutting.
Thanks to decades of deal-making
between NEA and AFT affiliates, state governments, and school
districts, school spending has increased by a five-fold while the
number of teachers and bureaucrats have increased by a factor of
three; school spending increased by 16 percent between 2000 and
2007 alone. Even during the economic malaise, most states sheltered
education from the cost-cutting applied to other line-items. The
Obama administration also helped by providing
$95 billion in federal stimulus spending and another $10
billion ladled to states and school districts as part of the
Edujobs plan for staving off expected teacher layoffs that weren’t
ever coming to pass.
But states are now realizing the full cost of the array of
degree- and seniority-based pay scales, defined-benefit pensions,
almost-free healthcare, and near-lifetime employment that has made
teaching the most-lucrative profession (and most-insulated from
hiring and firing) within the public sector. The average state
spent 34 cents on benefits for every dollar of teacher salary in
2008-2009 versus 28 cents six years ago. These burdens, along the
unlikelihood of future federal bailouts, and the realization that
traditional teacher compensation ineffective at rewarding
high-quality teachers and spurring student achievement, have led
budget-cutting governors and legislatures to team up with school
reformers on requiring teachers to pay more toward their healthcare
costs, move towards alternatives such as performance-based
pay, abolish collective bargaining, and make it tougher for
laggard teachers to keep their
jobs.
Some states are looking to increase education spending;
Florida’s Gov. Scott, looking to shelter his fellow Republicans in
the legislature from some of his more-unpopular moves, is proposing
to restore $1 billion in previous spending. But given the growing
number of Medicaid dependents, it is more likely that those
proposals will fall by the wayside. Spending cuts — along with the
overhauls of teacher compensation and performance management —
will be the norm.
But the Medicaid creep (along with the fact that Baby
Boomers who aren’t teachers are more concerned with staving off
healthcare costs than with expanding school bureaucracies) may
force even stronger measures. Start with reducing the
size of the teacher workforce. At least 34 percent of the
nation’s 3.2 million teachers are dedicated to courses such as
music and shop classes, subjects that are neither as important as
reading, math, science or foreign languages, often end up being
used by principals to warehouse laggard teachers, and are likely
better taught by experienced professionals and retirees. State
budget cuts could force districts to reduce those headcounts and
embrace the kind of outsourcing that has been a mainstay in the
private sector.
For the NEA and AFT, who have
long-benefited from annual increases in school spending, the
Medicaid crunch looms as another threat to their declining
influence over education policy. The unions can no longer keep the
grand bargain they struck decades ago with rank-and-file workers to
continually keep districts and states under their thumb, make
teaching a more comfortable profession, and insulate teachers from
economic reality. This state of affairs isn’t displeasing to
younger, reform-minded teachers (who now make up the majority of
rank-and-file members, are more than happy to ditch defined-benefit
pensions and traditional pay scales, and support getting rid of
laggard teachers). But the Baby Boomers who still control union
decision-making will be none too pleased.
At the same time, the Medicaid
crunch may prove as much a challenge for what has generally been a
bipartisan school reform movement as it does an
opportunity.
Centrist and liberal Democrat
reformers, already bristling at efforts by their conservative and
Republican counterparts to abolish collective bargaining
privileges, aren’t ready to talk about reducing teacher headcounts.
After all, they are mindful of the fact that the NEA and AFT are
still the biggest financiers of political campaigns within
Democratic Party politics (even as the relationship is more of a
marriage
of convenience than of
mutual benefit). They also know that the efforts by the unions
to co-opt progressive activists on ballot initiatives and
gubernatorial recalls may extend to primary challenges against
reform-minded Democrats already in office; together, the unions and
progressives may accuse those politicians of being anti-teacher and
too cozy with Republican reformers who regard school and government
healthcare bureaucracies with equal disdain.
Either way, Medicaid will prove
to be as vexing for those who defend faltering traditional public
school bureaucracies as it is for state budget directors and
taxpayers who deal with both.
