Schools from Bailout to Bankruptcy?
An article in today’s Providence Journal describes a familiar aspect of a town’s movement toward receivership that might point to a common contributing factor:
A national investment ratings agency, Fitch Ratings, on Thursday downgraded the outlook for Woonsocket. In its report the agency said the city of almost 42,000 people faced a School Department deficit of about $2.6 million in this current budget and that it views “the potential implementation of state oversight positively.” …
The city narrowly averted not meeting its $1.7-million school payroll next week, the re- port says, until the state altered its payment schedule for education aid and gave the city its $4.5-million share early.
As we’ve been discussing a school department deficit is at the center of East Providence’s problems, too. It would take some research to confirm, but I’m beginning to suspect that President Obama’s stimulus gifts to public schools might be a proximate cause of the bankruptcy.
I know that the Obama windfall to Tiverton averted the difficult decisions that the local taxpayers had managed to force through budget maneuvers and, indeed, led to additional spending. The following year, the school department successfully manipulated the budget system in its own direction (with threats of school closings and more) in order to build the federal handout into the regular budget. Indeed, it was clear from the first mention of the magic Obama money that the plan was to do exactly that.
In towns that hadn’t just slowed the growth of their school budgets (which the public-sector folks love to refer to as “a cut”), the stimulus funds wouldn’t have been used to replace lost funds, but to add new services. When the funds went away, the result would be a massive deficit. So, I wonder: how much of these budget-and-democracy-destroying deficits are attributable to the federal government’s gifts (borrowed from future taxpayers)?
To the extent that such is the case, the obvious and fair remedy is to stop the unfunded services, raises, and whatever else the federal money covered.