Kasich manufacturing a funding crisis

According to the Columbus Dispatch, the Ohio Lottery recently announced that

it was transferring a record $771 million to the Ohio Department of Education to support kindergarten-through-12th grade education. The profit — which by law goes to schools — came from record lottery sales of $2.73 billion in the fiscal year ending June 30.

That sounds like great news for cash strapped school districts that have suffered from historically massive budget cuts enacted by the Governor and his legislature in the last biennium budget.

However, the good news is only surface deep. For every dollar of lottery money that flows into the schools, the state removes a dollar of funding. Something school administrators recently wrote the Governor about

The Ohio School Boards Association (OSBA), the Buckeye Association of School Administrators (BASA) and the Ohio Association of School Business Officials (OASBO) want to set the record straight about lottery profits and their link to school funding.
“While it is true that all Ohio Lottery profits are used by the state to fund education, the profit from increased sales was simply used to free up other state funds that had previously been set aside for schools, allowing more money to be transferred into the stateʼs rainy day fund,” said OSBA Executive Director Richard Lewis. “No increase in this yearʼs funding for school districts will be available as a result of these unexpected profits.”

BASA Executive Director Kirk Hamilton said, “The increase in lottery profits was positive news for the state of Ohio because of its recent devastating budget shortfall. However, we were disappointed to see reports implying that it is school districts that will benefit. In reality, when lottery profits exceed estimates, the total amount available for Ohio schools does not change.”

“We urge Gov. Kasich to use this ʻextraʼ state money from the increased lottery profits to restore the budget cuts to education that were included in the current state budget,” said OASBO Executive Director David Varda. “It should also be utilized to help fund schools in the future as Gov. Kasich develops a new school-funding formula.

So all that extra lottery money didn't go to schools at all, instead it went into the Governor's rainy day fund. This move is made all the more troubling when one considers the news out of Cleveland this week.

The Mayor and Cleveland schools will be requesting an massive 15 mils in their levy

The Cleveland School District and Mayor Frank Jackson will ask voters this fall to raise their school taxes by about 50 percent to make major changes aimed at pulling the district out of its academic and budget hole.

The 15-mill levy -- the first operating increase for the district since 1996 -- would give the district an estimated $77 million more a year to add to its $670 million operating budget and $1.1 billion total budget.

We have long pointed out that the real crisis with Cleveland schools was its funding.

As buzz about the tax spread Wednesday, some jaws dropped at the amount. "I hope they dispense Depends when they announce it," said Cleveland City Councilman Mike Polensek, "so that when homeowners crap their pants it doesn't get too messy."

A little graphic, but it captures the problem. A problem the MAyor never sought to address with the legislature when crafting his "Cleveland Plan" - that plan now looks downright ridiculous given this levy news. Stephen Dyer, at 10th period is sanguine about it

It looks like there is little hope that the much ballyhooed Cleveland Plan will ever reach its promise of turning around Cleveland's public school system. Cleveland's teachers made major concessions to the district, including giving up seniority as a means of determining pay. All so that kids might be able to be helped by the necessary, but expensive, wrap around services the Plan promised.

Now that it looks like it will take a miracle to see any of that. And Cleveland teachers' good-faith efforts and sacrifices are all that will ever come from this Plan, whose legacy appears to be resigned to shorter school days, reduced offerings and larger classes.

I lay little of the blame for this issue at Cleveland's feet. This is a state problem, as it has been for decades. When the state cuts school funding, which it did in the last budget by $1.8 billion (nearly $3 billion if all stimulus money's included), districts are forced to make impossible, desperate choices.

When will the public schools rise again and force the state to fulfill its constitutional obligations? Maybe if the levy fails, media and others will finally take note of the State's failure. But why should it.

Indeed, the Mayor should have asked the Governor for funding as part of his plan, and the Governor given record lottery profits that are supposed to benefit the schools, ought to be ensuring that all that excess profit actually does go to the schools. Students and communities are being massively short changed.

We have a school funding crisis in Ohio, and there is literally no need for it to be happening. The state has both the constitutional responsibility, and the means to address it, it is simply refusing to do so.

How corporate tax loopholes defund the American Dream

Note: This is the first installment in a series on how corporate tax loopholes undermine the middle class—and what can be done about it. You can read the second article in the series here, and read the third article here.

By Amanda Litvinov and Dwight Holmes

As more middle class Americans than ever before wring their weary hands over whether to pay down their student loans or make their next mortgage payment, corporations are also experiencing a history-making moment. They’re sitting on record profits, and are taxed at historically low rates.

Between 2001 and 2010, corporate profits in America increased by 125%. Meanwhile, the median family income went down by 4.6% in the same time period. How was such growth in corporate profits possible, given the economic meltdown that started in 2007? Here’s the quick and dirty answer: They stacked the deck.

For decades, some of the nation’s most successful companies and CEOs have financed and lobbied enough politicians to curry a shocking level of influence over how laws are written and which ones pass. They’ve molded a system in which they can keep an ever-increasing share of profits for themselves, stunting the paychecks of working Americans and putting more burden on small businesses.

See the sources for the information used in this graph.

On top of that, corporations are contributing less in taxes to the federal government and to the communities where they conduct their business, meaning less money for serving the public good through education and other services. (A recent report shows 30 of the most profitable Fortune 500 companies pay more to their lobbyists than they do in federal taxes.)

“The middle class is being harmed by the structure of the economy, the structure of the tax burden, and the erosion of social services, including education,” said Robert Kuttner, a co-founder of the Economic Policy Institute and distinguished senior fellow at the non-partisan public policy center Demos.

When corporations don’t pay their fair share in taxes, Kuttner said, there are only three alternatives: “You either cut the services, you add to the deficit, or you make someone else pay—in this case, the middle class.”

We’re not talking chump change here. The Institute on Taxation and Economic Policy estimates that in the past three years, the federal tax revenue lost through corporate tax loopholes is $222.7 billion, which represents a loss of as much as $9.8 billion to public schools. State tax revenue from just the 265 largest companies saw losses of $42.7 billion in three years, roughly $15.4 billion of which would likely go to public schools if the loopholes were closed (see source 1 below).

Our economy was once much more balanced. Between 1948 and 1973, as productivity increased, worker wages grew at the same pace—in other words, American workers got a fair share of the growth. Between that and programs like the G.I. Bill and Social Security, America’s thriving middle class and vibrant public education system astonished the world. Then things changed. It’s more accurate to say that things were changed, by small but powerful groups, including ALEC and other right-wing organizations, and business leaders who wanted to see their companies’ already healthy profits grow exponentially.

To be clear: The concentration of power now in the grips of corporate America and the resulting unprecedented economic inequality we see today is no accident. For the past 30 years, we’ve all been trudging down a path that was carefully plotted for us by those who bought political influence for the express purpose of putting business profits above the well-being of America’s middle class.

They promised us tax cuts would lead to more revenues, greater investment and more jobs. Instead we have unprecedented deficits, falling family incomes, and four job-seekers for every open position.

Americans’ optimism about their children’s futures has reached an all-time low for good reason. Working hard and playing by the rules just doesn’t pay off like it used to; in past eras, greater equity in the distribution of income made for an economy that worked better for everyone. Our best hope for restoring balance is to demand change from our elected leaders.

“We need adequate levels of public spending that are not financed by taxes that come out of the pockets of the middle class,” says Kuttner. “And there are two sources to get those revenues: From wealthy people in their role as individual tax payers … and corporate income taxes.”

Raising our collective voice is the only hope we have in countering the other voices lawmakers hear every day—those of corporate lobbyists and influential business execs who are asking for even more tax breaks. Do you think they have your sons’ and daughters’ educations in mind?