The Economics of Non-Education

There’s nothing more powerful than an education – at least, that’s what everyone likes to proclaim. And when it comes to the yearly budgetary debates at both the local and federal levels, education always comes into the spotlight (and not in a good way).

One little-discussed piece of the equation is the American Recovery and Reinvestment Act of 2009. You probably know it as The Stimulus Plan/Package that President Obama signed into law and actively promoted. The thing is, this Act was built to mainly address the general economic downturn we experienced in 2008 that was mostly attributed to poor consumer spending decisions, unemployment increases, and oversold poorly-constructed (even ill-intended) financial products. Well, the ARRA ran out at the end of 2013, and that only means that education funding could really only take a budgetary hit.

In fact, in 2013, the Department of Education was allocated $71.9 billion – equivalent to 1.9% of the total 2013 Federal Budget. In 2014, DoEdu was allocated $71.2 billion, which (while still $3.1 billion more than the 2012 funding amount) is still $700 million less than 2013. That’s a lot of missed-opportunity. In 2015, the allocation fell to $68.6 billion, essentially falling back to 2012 levels. Where are these cuts coming from, and why are they increasing year after year? What are the tangible effects on our nation’s education system?

The reality of the cuts comes in many forms, and at the state legislation level, it translates directly into staff reduction, school closures, and education materials shortfalls. Teachers either get laid off, have pay stagnation or reductions, or programs get cut. It’s as simple as that. The major problem here is that the number of students is not decreasing (nor should it) at the same rate as the number of teachers that would be affected by these cuts. In fact, we would like to see a rise in enrollment across the board, as that would point to an increase in general education. With more students needing to cram into classrooms led by a single teacher, there is less emphasis on the individual students and thus less chance for ensuring that those same students can receive the depth of education that they deserve. We’ve seen it with classes that are catering exclusively to standardized testing and forgoing the life skills and general knowledge education that historically we’ve been instilling in our children. It’s as if thinking that the most absolute way of measuring our societal education level and potential for success is by a set of multiple-choice questions. Not only that, the lack of more personalized attention – an increasingly apparent scenario of a teacher’s inability (not by their own choice) to really invest in and commit their students not just in education but in personal growth – affects so much more than college acceptance rates and graduation statistics. It affects how we as a culture are shaping the future society we live in, and it’s scary.

Let’s go back to that figure of $700 million – that was the difference between the 2013 to 2014 DoEdu budgets. Think of what we, as a nation, could do with that. Actually, let’s take a step back and address where this $700m went. The Fed was still borrowing at the essentially same rate during those two years, and the overall federal budget increased ($3.5 trillion in 2013 and $3.7 trillion in 2014). So why did education spending get reduced? Did we need to redirect funding to some other effort at the time? Disaster relief and defense budgets weren’t trying to react or pre-empt any specific major efforts across those two years. Reports indicate that we are currently (and 2013-2014 included) funding schools less than we did in 2008, when the recession hit – so maybe that funding is getting directed into economic stimulus packages that are making a true impact on driving our nation forwards. While I don’t have a outright answer, one does exist somewhere in all the fine print if you’re willing to dig through all the paperwork.

Now about that $700 million – what does that get us? If we take a purely brute force approach and approximate 50 million students enrolled in the public school system, then each student would make do with $14 bucks in their pocket. Ok that’s not a great illustration of the magnitude of it. How about let’s assume 3 million teachers staffed in the public school system. Each one of those teachers could have netted $233 extra that next year. That’s an appreciable amount that would be likely be spent in local economies. Let’s take it one step further and assume 99-thousand public schools in our nation’s public education system. That would come out to about $7000 extra in each school’s discretionary budget. Hey, that’s not insignificant! That could quite easily fund an after-school program or a special education class. It’s this kind of impact that we’re discounting when the DoEdu’s budget gets slashed by what seems to be a miniscule percent in the whole scheme of it all. But in fact, it can make a difference.

Quite frankly, that $700 million certainly could have funded a myriad of education systems that purely serve the needy and lower-income neighborhoods. Some will argue that those efforts would be lost in the noise and not actually address the root of whatever problem it may be. However, to not even allow that to be an option is an even greater opportunity missed. That amount could have funded a significant student loan or payback program that could not just reduce a deficit in the federal ledger but also help the nations citizens to ease their financial burden, which in turn would naturally help to boost the economy and increase consumer confidence. One other example of where that amount could have been directed towards would be distribute the funding to the states to purchase new materials and equipment for students. Not only do many families have to struggle with their regular monthly bills, but many also have to figure out ways to pay for their children’s school supplies – which is even more exacerbated by budgetary cuts that existed in the first place. It’s a vicious cycle that could be slowed or staunched by an injection of funding from the appropriate source.

What’s driving our legislature to cut education funding year after year since the ARRA expired? Is this a problem that we’ll not be able to address until it is too late? Many of our leaders in the elite political stratosphere actually come from backgrounds that did not need to rely on the public education system nor the federal student loan program, and that’s definitely a privilege not shared by a large majority of our national population. While it does not necessarily mean there is a sense of entitlement, it does serve to illustrate that there’s every likelihood of a complete disconnect between the perceptions of the American education system of those in the seats of power and of those in the general public straining their necks to see over ivy-covered walls.

By not pointing out and facing the truth of slipping allocations for the education budget, we are really doing ourselves a disservice and creating a huge potential for economic strain in the future. Let’s reinvest in our education system, public and private, and not allow ourselves to entertain the possibility of digging a deeper economic hole by opting-out of educating our future generations.



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