Principles for the coming federal education bailout

Earlier this week, Sens. Bill Cassidy (R-La.) and Bob Menendez (D-N.J.) released a proposal for another $500 billion stimulus for state governments, echoing calls last week from more than 180 unions, advocacy groups, and think tanks for more coronavirus-related aid. Of course, all this would be on top of the $2.3 trillion CARES Act that Congress passed in late March. While the bulk of the CARES Act was devoted to business loans, unemployment insurance, and payments to individuals, it also contained $31 billion in education funds — including $13.5 billion for public schools and $14 billion for colleges.

The ink on the CARES Act was barely dry before it was clear that more money would be forthcoming. Claimants started lining up. Two days before President Trump signed the CARES Act, the School Superintendents Association sent an open letter declaring that “additional support will be needed.” Randi Weingarten, president of the American Federation of Teachers (AFT), warned of “mounting needs that are still ahead.” Lily Eskelsen García, president of the National Education Association (NEA), called on Congress “to work together quickly on the next package.”

While such demands are predictable and usually deserving of skepticism, this is an extraordinary time. The closure of schools and colleges has created enormous dislocations and imposed major costs — even as state and local budget projections have collapsed. Thus, the NEA, AFT, and a host of education associations have banded together to propose that the next big coronavirus spending bill include $200 billion in new K-12 spending, with $175 billion earmarked for local school districts, $13 billion for special education, and $12 billion for high-poverty schools. Meanwhile, the American Council on Education joined with dozens of higher education organizations to request an additional $46.6 billion in higher education funding, split equally between emergency grants to students and colleges.

It’s worth putting the numbers in perspective. While that $250 billion is an enormous sum — and substantially more than Washington spends annually on K-12 and higher education combined — it’s a significantly smaller portion of total K-16 spending. If one includes all federal, state, and local spending, the proposals amount to roughly one-quarter of annual public spending on K-12 and higher education.

Whether such an outlay is too much (or not enough) is a complicated calculation. But states and local school systems account for 90 percent of school spending in the U.S., and their budgets have taken a massive hit. Hawaii’s governor has floated that teachers may have to take a 20 percent pay cut. New York and Alaska are bracing for overall state revenue to drop by 17 percent or more. To put those numbers in perspective, during the Great Recession per-pupil school spending fell by 7 percent. Georgetown University’s Marguerite Roza explains, “As millions of people lose their jobs, income taxes fall. And we’re already seeing state sales-tax revenue plummet and state reserves drained to meet current public-health needs.” As a consequence, she says, the hit to school budgets in 2020-2021 “looks to be devastating.”

The upshot is that as lawmakers think about how to aid schools and higher education institutions, there are three guiding principles worth keeping in mind.

First, Washington should help cover sudden, unforeseeable revenue shortfalls and expenditures necessitated by the coronavirus or mandated shutdowns. These are costs that no one could reasonably expect schools to anticipate, and it’s appropriate that even those worried about the national debt or federal largesse should look to Washington as the funder of last resort. Schools are likely to have new costs related to testing and screening, remediation, rolling closures, deep-cleaning school facilities, and protecting staff. There may well be unanticipated costs required by unconventional staffing arrangements. Add to that the short-term costs from this spring’s shutdown: Education Week has detailed costs already incurred by “delivering meals to students, setting up makeshift child-care centers, and purchasing distance learning materials for students.”

Second, however, is that this ought not serve as an excuse for states, localities, or interest groups to pursue unrelated agendas or to pawn off responsibility for man-made shortfalls. And there’s plenty of that to be seen. For example, the AFT and NEA have requested an indeterminate sum to, among other things, build more schools — an ironic request, given concerns that student enrollment is likely to drop next year, and perhaps in successive years, if some instruction migrates online. The AFT’s Weingarten has also urged that federal aid “protect workers’ pensions”— even though reckless spending and underfunding by states meant that 70 percent of teacher pension spending was paying down debt (rather than providing benefits) before the coronavirus. Subsidizing unfunded pension debt doesn’t serve kids or preserve jobs, and promises only to reward careless governance.

Finally, this is no time for blank checks. Congress ought not tie the hands of educational leaders or attach strings to funding, but it absolutely needs to clearly see where these enormous requests come from. Why $175 billion for school districts? Why $13 billion for special education or $46.6 billion for higher ed? What are the specific new costs (and potential off-setting savings) involved? It can be easy, in a time of crisis and open pocketbooks, to treat spitballed sums as authoritative asks. As Congress weighs a raft of competing demands, educators should be ready to show their homework.

Washington can and must help schools negotiate the current crisis. Even to fiscal conservatives like us, it’s obvious that the federal government has a vital role to play and that this is no time for penny-pinching. But that must entail wisdom rather than wish lists. A responsible federal reaction ought not encourage or excuse irresponsible leadership in states or communities.

Frederick M. Hess is the director of education policy studies at the American Enterprise Institute. RJ Martin is a research associate at AEI.