A small school district in Michigan has run out of money to pay its teachers. But the school year isn't over until June 23.
The Buena Vista Education Association convened most of its 27 teachers on Monday for what some described as an emotional meeting. They voted to continue teaching, despite learning on Friday that the school district would be unable to pay their salaries starting in mid-May -- because it had run out of money.
What a way to ring in Teacher Appreciation Week.
The teachers voted to continue teaching because, as Joe Ann Nash, president of the teachers' union, put it: "We stick together." Nash teaches third grade. On Friday, her students asked her if she'd been fired. "I told them, look, the district doesn't have any money to pay us," she recalled. "They told me, wherever we go, they're going to go with me. They're sweet."
Like other teachers losing their pay, Nash has her own financial concerns: her 17-year-old son is supposed to go off to college, but she's worried she won't be able to pay for it.
Since the start of the recession, school districts across the country have been cut to the bone. Class sizes are rising, teachers are fired, extracurriculars are slashed and school security guards laid off.
So how did the Buena Vista school district get to this point?
Michael Podgursky, an economics professor at the University of Missouri-Columbia who specializes in school finance, said Buena Vista is a particularly nasty example of the consolidation of small school districts, aggravated by the recession and burgeoning teacher pension costs.
"They're down to 471 students. They're at least not harming too many," Podgursky said. "It's a solvable problem."
Solvable, he said, by consolidation. "We've been consolidating districts for the past 100 years," Podgursky said. "It's going on constantly," especially in states like Wyoming, with many rural districts. American had 117,108 school districts in the 1939-1940 school year, according to federal data. By 2010-2011, that number was down to 13,588 (though federal researchers said survey changes may account for some of that difference).
School districts across the country are feeling the squeeze. Last year, the Chester Upland School District in suburban Philadelphia stopped paying its teachers. As in Buena Vista, teachers continued working for free. In November, the state proposed that the district close three schools and sell buildings to get out of the hole. York, Pa., was in such financial desperation that it considered converting to full charter school district before ultimately choosing a state-mandated financial recovery process last week, according to the York Dispatch.
This process is likely accelerated by the recession. "There were a lot of teacher layoffs. state and local governments got hit badly on the revenue side," Podgursky said. "It got postponed by the stimulus, but now it's letting loose."
Buena Vista is a tiny, mostly black township located within Saginaw County, Mich. By most measures, the Buena Vista school district is failing. Over the last few years, the district has lost about 600 students, according to a Michigan Department of Education representative, and half of its teaching staff. As MLive reports, none of its students were deemed proficient on eight iterations of state standardized tests, the Michigan Educational Assessment Program.
Even its own teachers know this. "We've said for two years now that we need to consolidate," Nash said. "We have less than 500 students and two of our buildings can hold more. It's a tough decision, but it should have been made long before now. We've been cut to the bone."
In June 2011, the district went into deficit for about $55,000. By last summer, that deficit had grown to $1 million. The district has submitted a deficit elimination plan to the state, but the state didn't approve it.
The most immediate cause of Buena Vista's financial strife is an accounting problem. For years, Buena Vista ran the Wolverine Secure Treatment Center, an alternative school that brought in extra state revenue. The district is supposed to report any program changes to the state, but failed to say until February that Wolverine left the district last summer. The state had paid Buena Vista for running the program, and the district spent the money. According to state records, the district now owes the state nearly $402,000 To recoup those funds, the state froze the district's funding for at least three months.
"The department believes this is a very difficult situation for everyone, especially the students and the teachers," Jan Ellis, a Michigan Department of Education spokeswoman, told The Huffington Post. "We have a legal obligation to recover funds allocated for a program that wasn't being serviced out of a district. We are trying to fulfill our financial obligation. The overall responsibility, financial health and educational responsibility for the children lies within that local district. They ultimately have to be held responsible."
The Buena Vista School Board will hold an emergency meeting Monday night. Consolidation, massive layoffs and a request for an emergency manager -- as the district previously indicated -- are on the table. The Michigan Education Association is considering legal action against the district, MLive reported.
Superintendent Deborah Hunter-Harvill told HuffPost she is going to wait until after the meeting before answering specific questions. "The board of education will continue its deliberations and discussions regarding the future of our district," she said. "I don't know what our configuration will look like, but .. when I arrived here in August of 2012, I came to ensure a quality education for all students. The board will advise the public of its progress as soon as that's possible." For the time being, she said, "pray for our children."
UPDATE: May 7 -- At the emergency meeting Monday night, Buena Vista's school board voted to lay off all its employees by the end of the month, despite the teachers' vote to work for at least this week without pay. On Tuesday morning, the school district posted an update to its website with a notice in big letters: "school will be closed Tuesday." There will be a meeting for parents this evening.
"Last night, we yet again saw proof that politicians, administrators and other so-called 'leaders' consistently put money first and our kids last," Steve Cook, president of the Michigan Education Association, said in a statement. "Faced with a selfless offer of help from their employees to continue working, without the guarantee of a paycheck next payday, Buena Vista's school board and administration gave up on their students and employees and laid everyone off."
Also on HuffPost:
The U.S. incarcerates its citizens at a rate roughly <a href="http://www.parade.com/news/2009/03/why-we-must-fix-our-prisons.html" target="_hplink">five times higher than the global average</a>. We have about 5 percent of the world's population, but 25 percent of its prisoners, according to The Economist,. This status quo costs our local, state and federal governments a combined $68 billion a year -- all of which becomes a federal problem during recessions, when states look to Washington for fiscal relief. Over the standard 10-year budget window used in Congress, that's a $680 billion hit to the deficit. Solving longstanding prison problems -- releasing elderly convicts unlikely to commit crimes, offering treatment or counseling as an alternative to prison for non-violent offenders, slightly shortening the sentences of well-behaved inmates, and substituting probation for more jail-time -- would do wonders for government spending.
End Of The Drug War
The federal government spends more than <a href="http://www.cbsnews.com/8301-18563_162-20072096.html" target="_hplink">$15 billion a year</a> investigating and prosecuting the War on Drugs. That's $150 billion in Washington budget-speak, and it doesn't include the far higher costs of incarcerating millions of people for doing drugs. This money isn't getting the government the results it wants. As drug war budgets balloon, drug use escalates. Ending the Drug War offers the government two separate budget boons. In addition to saving all the money spending investigating, prosecuting and incarcerating drug offenders, Uncle Sam could actually regulate and tax drugs like marijuana, generating new revenue. Studies by pot legalization advocates indicate that fully legalizing weed in California would yield <a href="http://canorml.org/background/CA_legalization2.html" target="_hplink">up to $18 billion annually</a> for that state's government alone. For the feds, the benefits are even sweeter.
Let Medicare Negotiate With Big Pharma
The U.S. has <a href="http://www.reuters.com/article/2009/06/01/us-healthcare-costs-sb-idUSTRE5504Z320090601" target="_hplink">higher health care costs than any other country</a>. We spend over 15 percent of our total economic output each year on health care -- roughly 50 percent more than Canada, and double what the U.K. spends. Why? The American private health care system is inefficient, and the intellectual property rules involving medication in the U.S. can make prescription drugs much more expensive than in other countries. Medicare currently spends about $50 billion a year on prescription drugs. According to economist Dean Baker, <a href="http://www.cepr.net/documents/publications/intellectual_property_2004_09.pdf" target="_hplink">Americans spend roughly 10 times more than they need to</a> on prescription drugs as a result of our unique intellectual property standards. These savings for the government, of course, would come from the pockets of major pharmaceutical companies, currently among the most profitable corporations the world has ever known. They also exercise tremendous clout inside the Beltway. President Barack Obama even <a href="http://www.huffingtonpost.com/2012/09/02/barack-obama-politics_n_1847947.html" target="_hplink">guaranteed drug companies more restrictive -- and lucrative -- intellectual property standards</a> in order to garner their support for the Affordable Care Act.
Offshore Tax Havens
The U.S. Treasury Department estimates that it loses about <a href="http://www.ctj.org/pdf/stopact.pdf" target="_hplink">$100 billion a year</a> in revenue due to offshore tax haven abuses. Sen. Carl Levin (D-Mich.) has been pushing legislation for years to rein in this absurd tax maneuvering, but corporate lobbying on Capitol Hill has prevented the bill from becoming law.
Deprivatize Government Contract Work
In recent years, the federal government has privatized an enormous portion of public projects to government contractors. Over the past decade, the federal government's staffing has held steady, while the number of federal contractors has <a href="http://pogoarchives.org/m/co/igf/bad-business-report-only-2011.pdf" target="_hplink">increased by millions</a>. This outsourcing has resulted in much higher costs for the government than would be incurred by simply doing the work in-house. On average, contractors are paid <a href="http://pogoarchives.org/m/co/igf/bad-business-report-only-2011.pdf" target="_hplink">nearly double</a> what a comparable federal employee would receive for the same job, according to the Project On Government Oversight.
Print More Money
There's an old saying in economics: You have to print money to make money. <a href="http://www.huffingtonpost.com/2012/10/09/underwear-sales-growth-economy_n_1952214.html" target="_hplink">Okay, there's no such saying</a>. Nevertheless, the great boogeyman of many conservative economic doctrines -- inflation -- isn't such a bad idea during periods where much of the citizenry is drowning in debt. Inflation is by no means a perfect remedy: it's a stealth cut to workers' wages. But it also has many benefits that are often unacknowledged by the Washington intelligentsia. Inflation makes housing debt, student loan debt and any other private-sector debt more manageable. Today, when <a href="http://www.corelogic.com/about-us/researchtrends/asset_upload_file448_16434.pdf" target="_hplink">10.8 million</a> homes are underwater -- meaning borrowers owe banks than their houses are worth, moderate inflation could ease that debt burden. By effectively reducing monthly bills, moderate inflation could actually put more money in the pockets of these homeowners to spend elsewhere, thus stimulating the economy. Moderate inflation -- 5 percent or so -- could also help alleviate the <a href="http://www.cbsnews.com/8301-505145_162-57555780/student-loan-debt-nears-$1-trillion-is-it-the-new-subprime/" target="_hplink">$1 trillion</a> in student debt currently plaguing America's graduates. Make no mistake -- hyperinflation of 20 percent, 30 percent or more -- is bad. But the U.S. has ways to crush inflation when it gets out of hand, as proven by the Federal Reserve under then-Chairman Paul Volcker in the early-1980s.
Print Less Money
The government prints a <em>lot</em> of $1 bills. But it turns out that minting $1 coins is much, much cheaper. Over the course of 30 years, the government could save $4.4 billion by switching from dollar bills to dollar coins. Here's looking at you, <a href="http://www.usmint.gov/mint_programs/nativeamerican/" target="_hplink">Sacagawea</a>.
Immigration: Less Detention, More Ankle Bracelets
The government spends <a href="http://newamericamedia.org/2012/04/ice-slow-to-embrace-alternatives-to-immigrant-detention.php" target="_hplink"> $122 per person, per day</a> detaining immigrants who are considered safe and unlikely to commit crimes. The government has plenty of other options available to monitor such people, at a cost of as little as $15 per person. For the first 205 years of America's existence, there was no federal system for detaining immigrants. The process began in 1981.
Financial Speculation Tax
Wall Street loves to gamble. In good times, financial speculation is the source of tremendous profits in America's banking system, but when the bets go bad, the government picks up the tab, as evidenced by the epic bank bailouts of 2008 and 2009. Unfortunately, this speculation is difficult to define in legalistic terminology and even more difficult to police. One solution? By taxing every financial trade at the ultra-low rate of 0.25 percent, the U.S. government can impose a modest incentive against gambling for the sheer sake of gambling. If there's an immediate cost to placing a bet, a lot of traders will choose not to bet. What's more, this tax could raise about <a href="http://www.ips-dc.org/media/why_a_financial_transaction_tax" target="_hplink">$150 billion a year</a> for the federal government.
Taxing greenhouse gases would generate $80 billion a year right now, and up to $310 billion a year by 2050, <a href="http://www.brookings.edu/research/papers/2012/07/carbon-tax-mckibbin-morris-wilcoxen" target="_hplink">according to an analysis by the Brookings Institution</a>. It would also help avert catastrophic ecological and economic damage from climate change.