Home > Uncategorized > NYTimes Headline Overstates Fiscal Health of Public Schools

NYTimes Headline Overstates Fiscal Health of Public Schools

March 2, 2021

The NYTimes Headline reads “Why the Coronavirus Did Not Bring the Financial Route That Many States Feared“. Had I not read deeply into the article by Mary Ellen Walsh, I would conclude that public schools were home free. But these two paragraphs in the middle of the article would set me straight:

….averaging the states’ revenues — the J.P. Morgan report used weighted averages to show that revenues last year were down just 0.06 percent from 2019 — can mask the pain of the states whose tax collections have not yet rebounded. And focusing just on state revenue collection glosses over the weakness of local governments, which administer many social services under state administration.

We know that local governments are doing far worse than the states,” said Lucy Dadayan, a senior research associate at the Tax Policy Center.

I was stunned and somewhat incredulous when I read the headline. I was certain State revenues would take a nosedive as a result of the recession and, as a result, schools would face some serious budget headwinds for 2021. My thinking, however, did not take into account the VERY positive impact that the CARES act had on consumer spending, which helped states who relied on sales and income taxes to keep their heads above water. Other states, like my home state of NH which has no sales or income taxes, did not fare so well— though they DID far better than they forecast at the beginning of the pandemic. The cautionary paragraphs above, though, indicate that for the near term public schools, which rely more on LOCAL taxes, may not be out of the woods in terms of budgets.  

Unsurprisingly some GOP Senators and Congresspersons are railing against more federal funds to “bail out” the free spending liberal states. But, as the maps below show, the Red State/Blue State paradigm does not work in this instance, contrary to what GOP legislators state: 

REVENUE COLLECTION 2020:

GREEN = INCREASED COLLECTION

ORANGE = DECREASED COLLECTION

The top map illustrates the tax collection results in 2020 while the lower map shows the web/blue breakdown in 2020. The overlap between the two maps is limited… which SHOULD lead to bipartisan support for aid to states. But crafting legislation that makes it clear that any federal funds should not be used to relieve state tax burdens. If some states, like Idaho, end up with surpluses as a result of the CARES act, they would be wise to either expand infrastructure spending or replenish or establish rainy day funds. The next few weeks should indicate whether financial realities will prevail over ideology. 

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