April 23, 2024

Marc Stier: We can’t afford not to fund public education

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Marc Stier is the executive director of the Pennsylvania Policy Center. This op ed originally appeared in the Penn Capital-Star.

Last year, Commonwealth Court Judge Renée Cohn Jubelirer ruled that Pennsylvania’s public school funding system was unconstitutional because it failed to guarantee every student a “thorough and efficient education.”

In January, the Basic Education Funding Commission voted for a seven-year plan designed to fully and fairly fund our schools, provide tax relief to school districts shouldering heavy local taxes due to the lack of state funding, and direct new funds to educational programs proven to enhance student achievement.

Since then, Republicans have largely remained silent about the plan, saying mostly that “Pennsylvania can’t afford it.”

However, the reality is that Pennsylvania can’t afford to miss this opportunity to provide all our kids with a proper education.

One reason to act now is the $14 billion surplus in the General Fund and Rainy Day Fund created by our tax dollars flowing through federal COVID-19 relief grants. These funds are meant to be spent for the benefit of Pennsylvanians. Even if $2 to $4 billion is set aside for a future economic downturn, there would still be enough money to fund the first four years of the seven-year program.

What about the subsequent years? The Republicans rightly indicate that the surplus will eventually run out and that the state will be spending more each year than it takes in as soon as next year.

This is a valid concern. However, the Republicans lack the moral authority to raise it. The structural deficit—wherein annual expenditures exceed annual revenues—is not a new phenomenon. It plagued Pennsylvania’s budgets for at least ten years before federal COVID relief was enacted, primarily due to the predominantly Republican-led General Assembly’s many corporate tax cuts.

In 1972, corporate taxes comprised 30% of state revenues. Next year, they will only account for approximately 15%. During this period, the Capital Stock and Franchise Tax on corporations was repealed, and the base of the Corporate Net Income tax was reduced. Few Republicans raised concerns about these tax cuts creating future deficits.

Two years ago, Republicans demanded a 50% reduction in the corporate net income tax rate over nine years in exchange for additional education funds. No Republicans argued that the state could not afford $2 billion in tax cuts when future structural deficits were likely. (But I did.)

It appears that for Republicans, we can always afford tax cuts for corporations, but we can never afford to provide every kid in the state with a good education.

That has been the consistent choice the Republican-led General Assembly has made, sometimes with Democratic support. It’s no coincidence that as the chart below shows, the state’s share of K-12 education funding decreased at about the same rate as the share of state revenues from corporate taxes. The school funding crisis addressed in the school funding lawsuit is, in part, a product of corporate tax cuts.

The cost of all the corporate tax cuts since 1972 would have more than covered the $5.6 billion cost of the BEFC plan in its fifth year, according to our conservative estimate. Had those corporate cuts not taken place, the state would have sufficient revenue to fund the entire plan—or the state could have been using corporate tax revenues to fully and fairly fund our schools already.

Republicans argue, however, that cutting corporate taxes creates jobs and encourages economic growth.

There is little evidence that deep corporate tax cuts have helped improve Pennsylvania’s economy. Indeed, the regions of the state that are most struggling economically—which tend to be overwhelmingly represented by Republicans—have lower taxes than the regions of the state that are growing.

Because corporate taxes constitute a small portion of the cost of doing business, even expensive, deep cuts have only a small positive impact on the economy, as I showed here.

On the other hand, there is considerable evidence that new education funding can improve student achievement, raise wages, and thus be a far more effective way to create new jobs and grow our economy. Research by C. Kirabo Jackson and others suggests that a permanent 10% increase in education spending could result in adults having 7% higher wages at age 40 and a 3-percentage point reduction in the likelihood of being poor.

Eric Hanushek, an expert on education funding who testified for the defense in the school funding lawsuit, acknowledged recently that additional school funding can increase educational achievement.

And, in other work, Hanushek estimated that if all states matched the education performance of the highest-ranked state in the country, Minnesota, in two generations Pennsylvania’s Gross Domestic Product per capita would be roughly 225% higher than it would be with our current levels of academic achievement. Corporate tax cuts could not have that kind of impact on our economy.

We shouldn’t be surprised by the enormous impact investing in education has on economic growth. The story of economic growth in the United States is largely the story of how mass education created the most productive workforce in the world. This story began in Pennsylvania, largely thanks to Republican Thaddeus Stevens.

At some point, we may need new revenues to fund the entire seven-year education program. However, there are many ways to raise them. Most importantly, as we will document in detail soon, it’s possible to fund the whole program without raising income tax on anyone’s wages.

So, the response to the Republicans’ claim that “we can’t afford to fix public education” is that, from constitutional, moral, and pragmatic perspectives, we can’t afford not to fix public education. The stakes are not just the future of kids who attend the worst-funded schools in the state. The economic future of everyone in our state, our children, and our grandchildren depends on doing the right thing, and doing it now.

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