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Thursday, April 1, 2021

A bad bargain then, a bad bargain now

Let’s talk about education. McKee proposes $911 million for local public school aid, a 3% bump, but also proposes charter schools get a 9% bump

By Tom Sgouros

Tom Sgouros
It is budget season in Rhode Island, and the discussions at the state house are perhaps a little less panicked since the Biden administration has come through with some badly-needed aid. 

You can tell there is breathing room because we now hear how we don’t really need to revisit our tax policy. For the record, the state plans to spend $100 million on a tax cut this year, but only to people whose cars are worth over $4,000. 

And both the new Governor McKee and new Speaker Shekarchi seem interested in ignoring the issue of taxes, letting the car tax cut stand and resisting the call to restore income taxes on high incomes. 

Let’s talk about education. The Governor is proposing to spend $911 million on local public school aid. This is about a 3% bump up from last year, which is certainly not awful. Charter schools get a 9% bump, though. 

Time for some history. What $911 million actually means is that we may finally reach the education funding levels of… the Almond administration. The 2003 budget of Lincoln Almond, not exactly a profligate spender, gave $904 million (in 2020 dollars) to fund local public schools. After him, Governor Carcieri pretty much level-funded education until he slashed it mercilessly when the financial crisis hit in 2008. 

The story was not all bleak. Over his term, Carcieri managed to triple the state budget for charter schools. And between 2008 and 2011, when our traditional public schools were seeing a 20% cut in state aid (again, correcting for inflation), charter schools saw a 33% increase. 

Governors Chafee and Raimondo managed to restore some funding, but not nearly what was lost. (Though they did manage to triple charter school funding again.)  

Over the past two decades, we have cut a truly devastating amount from traditional public schools. Had we only kept pace with inflation since 2003, we would have spent more than $1.8 billion more on supporting our schools over that time. 

But we didn’t do that. We gave away money instead. Aside from the hugely expensive car tax cut. There was a capital gains tax cut in 2001, then the “flat” tax slashed tax rates (only for the rich) every year from 2007 until 2012. 

The top income tax rate on the richest Rhode Islanders is now below 6%, down from over 12% in the early 1990s while the top rate on the median taxpayer only went down from around 4% to around 3.75% over that same time. 

Not only did the state cut the money available to schools, we added new testing mandates, reporting mandates, curriculum standards, financial mandates, and more. This has meant perennially strapped school budgets, property tax increases, and a tremendous amount of budgeting uncertainty at public schools as sometimes the state education department manages to throw some extra scraps. 

During the past 20 years, my children went through the public schools in my relatively prosperous town. I could not help notice that even here, each year the opportunities available to them shrank as elective classes were canceled, school buildings closed, art and music teachers shared between schools and much more. The bargain was supposed to be this would be made up by the economic boom powered by the hundreds of millions of dollars we gave away. 

It seemed like a bad bargain at the time, and I’m afraid it seems even worse in hindsight. We gave away tons of money and got essentially nothing for it except weaker government and worse services, education only one among many. 

There are bills in both the House and Senate this year, to increase the top income tax rate from the current 5.99% to 8.99% on incomes over $475,000. These will not even get back to the 1990s rates, but will at last maybe show we begin to recognize what a terrible bargain those tax cuts were. 

Tom Sgouros is a software engineer and freelance public policy consultant who lives very close to sea level.

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