Show-Me Institute Podcast

Climbing Down the "Fiscal Cliff" with Stéphane Lavertu

In this episode, Susan Pendergrass speaks with Stephane Lavertu, Professor at the John Glenn College of Public Affairs at Ohio State University and a Senior Research Fellow at the Thomas B. Fordham Institute, about the so-called "fiscal cliff" in public education funding. They discuss the idea that returning to pre-pandemic funding levels constitutes a crisis, the implications of declining student enrollment, whether maintaining or increasing current funding levels is truly necessary, and more.

Stéphane Lavertu’s teaching and research focus on public administration, political economy, public policy analysis and evaluation, and education policy and governance.

He has a doctorate in political science from the University of Wisconsin, a master’s degree in education from Stanford University, and a bachelor’s degree in political science from The Ohio State University.

His interdisciplinary research examines the politics of public administration and the performance of public organizations, particularly in the context of K-12 education. He publishes in public administration journals such as Journal of Public Administration Research & Theory, Journal of Policy Analysis & Management and Public Administration Review; political science journals such as American Political Science Review, American Journal of Political Science, and Journal of Politics; education journals such as Educational Evaluation & Policy Analysis and AERA Open; and economics journals such as Economics of Education Review, Journal of Public Economics, and Journal of Urban Economics.

Produced by Show-Me Opportunity

Duration:: 23m
Broadcast on:: 28 Jun 2024
Audio Format:: mp3

(upbeat music) - Very excited to welcome today, Stefan Lovertune, professor of public policy, public affairs at the Ohio State University as we were just saying. And I'm really looking forward to talking to you today because you recently had a piece on the Fordham Institute website that relates to something I've been talking about a lot, which is the fact that almost from the beginning of the pandemic, when the government announced stimulus packages, I remember three years ago, almost right away hearing people say, well, you know, three years from now, there's gonna be a fiscal cliff. And we were talking about this internally, like somebody rolled that phrase out and it has done wonders, it has stuck. And you have a piece recently on Ohio's coming fiscal cliff, which is to say that federal government has sent out a lot of money, it's drying up, and a lot of districts are going to feel some pain, basically, right? But in Ohio, well, anywhere, in Missouri too, shouldn't they have seen it coming? - Well, they definitely should have seen it coming. And you're right, I think that phrase has been really effective. And Marguerite Rosa at Genomics Lab at Georgetown thing has been really effective at getting this out there and some other folks. Yeah, everyone knew it from the very beginning. And I thought when I wrote this piece last fall, I thought for sure that I was late to the game, that I was saying something that everyone should already know and they should have been preparing for it, but they weren't. And it was obvious that they weren't preparing for it. So I thought this is my last hope. This is last fall, I thought this is your best chance to adjust the way that you're running your districts to be more efficient ahead of September 30th, 2024. It's coming up when the funds run out. And I was wrong. People didn't pay attention. In fact, I had a student who had been interviewing districts and showed them my piece and they said, "Well, why didn't anyone tell us?" So I was stunned, yeah. - Yeah, Marguerite has put out a lot of ticks and tips for when this funding runs out. Don't fill vacant positions. Things like that. And I don't know who is or isn't being reached by that. Missouri's got a lot of small rural districts. I know Ohio does too. And I think they got to check for like a million dollars and didn't really know what to do with it. So a lot of districts and at the time, show me Institute, we put out a piece saying, "Hey, you know, be careful about this. "Don't make permanent commitments "with this short-term funding, "like hiring people and starting new programs." But I think a lot of districts did that anyway. Did they not? - Absolutely, and their treasurer certainly are aware of this. In Ohio, we have a system where they have to produce financial forecasts twice a year and then the state makes these publicly available. And Columbus City Schools, for instance, acknowledged last fall that they had hired 450 full-time staff with this money and that it was a significant risk because the money would run out. And so they were trying to convince voters to pay for the levy to cover these extra staff. Now, meanwhile, this is a district that was losing enrollment, right? Long-term demographic trends, right? So they're losing enrollment and then you got the pandemic, which lets more enrollment losses. They should have been cutting staff. They didn't cut staff. They added 450 people. And now estimates are that it's gone up to 600. And now the money runs out September 30th. So what do you think is going to happen? They're going to either ask for more money or they're going to have to get rid of some people. Both of them are going to disrupt the district. - Yeah, so I keep thinking about this. I've been trying to visualize it. I wrote a blog and I made a graph of federal money and then there's a big hump in it. Then it just goes back to where it was. It's generally been 10 cents on the dollar of public education. It's going to go back to about a 10th of state and public education revenue. But the term cliff just bothers me because if you get a big influx and then the influx goes away, is it a cliff? - I mean, I know it's been an effective term but it just doesn't seem like the right term to me. I think it's like wily coyote going off a cliff and going, whoo, like that's a cliff. This seems to me like we saw it come in and we went up. We hiked up the hill. Now we're going to hike back down the hill to parking lot. And I understand what you're saying. This is very true in Missouri. While we were up there, parking lot got lower because enrollment was already declining. So you're going to have these twin forces. And Missouri has let Missouri districts use pre-pandemic enrollment numbers through this year. So next year will be the first year they have to use actual, I mean, I say actual, they can look back three years but they let them look back four years. So they've been using 1920 numbers and the federal money is going to run out and people running around saying it's a cliff. I think that's what bothers me. - I see your point. And I think at the outset, maybe I had a similar reaction but very quickly what I realized is that district management assumes last year's budget and doesn't worry about how we got there. It's almost like there's no memory. Now we know that part of this might be because school board members don't stay in their positions very long. They haven't been along, you know, they're very long. Maybe they don't remember what happened with the Great Recession where the exact same thing happened. The Obama stimulus tried to shore up funding to buy districts sometime so that they can, in a controlled and rational way sort of adjust to lower spending levels, but they didn't. No, I'm dumbfounded as well. It's pretty amazing. - So I also talk a lot about in Missouri and it's really national. It's in just about every state, sort of a few. Birth rates went down during the Great Recession. So we had our biggest kindergarten group in 2013, about five years later, five years after 2008, sure enough, that was our biggest, every kindergarten group since then it has been smaller. So somebody I assume does enrollment forecasting. I know the federal government does it, but I assume within a state or in a district, you're looking at enrollment forecasting. And so we have had the study to find, yeah, we lost a lot of kids from the pandemic. We lost more. And the federal government keeps sort of ratcheting down their projections because I think birth rates are lower than they expected them even to be. But I feel like when I talk about Missouri being a declining enrollment state, I'm really surprising everyone. People are like, you're kidding, where are they going? What state are they going to? And I'm like, not really anywhere. The kids just weren't born. And do you find that in Ohio? Do people realize Ohio is declining enrollment? - I'm not sure if there's broad, yeah, they tend to blame school choice. They blame charter schools. They blame private schools. They blame the pandemic. I don't hear often districts saying we just naturally have enrollment declines. It's more concerned of someone's taking our money away. Where's it going? - Yeah, we have to decline enrollment districts definitely building schools, buying property. And that concerns me too because, you know, to build a school building, normally districts issue bonds. And those are normally in the tens of years, like 30 years, 20 years, long-term commitments. And that is still happening 'cause I think people think that the pandemic, pre-pandemic numbers are coming back. And then I can say in Missouri, they are not. What about, what do you know about the impact of the federal stimulus money in Ohio on learning recovery? - Well, so I have a friend who did a correlational analysis and it showed that the money had minimal impact, if any. And then this week, just a couple of days ago, two papers came out and we saw those, one from Harvard and one by Gold Haber, who's associated with AIR. They found similar effects to my friend, Ohio. So I guess the average effect for the United States is similar to the average effect in Ohio. And that, you know, the authors of those papers like to say that this is about the amount of gains you would expect from increasing spending. So we have these analyses that tell us how much should we expect in learning gains from increasing spending? And they say that this is right about there. So that's pretty good, they say. Well, those are very modest effects. I mean, you get much larger effects, for instance, in Missouri, from going to a charter school without spending any money. So you can imagine that if the choice is between sending a bunch of children to charter schools and spending extra money and keeping them in district schools and the learning gains are bigger from sending them to charter schools, that's a better option. So I don't quite agree with the benchmarks they're using, but even if you're just talking about, did people recover? No, they didn't. So in mathematics, about a third of the gains, this is being generous, about a third of the losses from the pandemic were recovered. And a big chunk of that was from this stimulus money according to these papers, but kids are really off track in mathematics still. And the money goes away now. So now what happens? What do you think will happen? What do you anticipate in Columbus public schools? Well, so I mean, so-- What are they gonna do if they've hired 600 people? Yeah, there's a new budget on down. And this relates to some of the things that you were talking about before. The thing about government is if you give people benefits, or if you hire folks or build them new schools, it's really hard to ratchet down. It's the politics of blocking. As soon as you try to take something away, you have this constituency that's been created by this public good, or this public benefit, that's gonna block it every single turn. And so one of the reasons that this ends up being a cliff is not so much that the superintendents are stupid and didn't see this coming. It's that the political forces in their districts don't let them act as if they need to get their houses in order. So they're unable to close schools. They're unable to get rid of staff. In fact, they added staff instead of getting rid of staff that they were supposed to get rid of. So what ends up happening is that the situation has to be extremely dire for those sorts of choices to be made. And so what I anticipate happens is that we get to this fall, the money is running out and they approved the levy last year that was supposed to fix all this. Still, it's not fixing all of it for the reasons we just discussed. There's two options. One is they put a levy on the ballot and it passes. And another is they put a levy on the ballot and it fails. If the levy fails, suddenly everyone's in panic mode and realizes there's a crisis. And if the public is paying attention and realizes there's a crisis, maybe they can overwhelm the opposition from teachers unions and some of these other entrenched interests that keep empty buildings open and that want as much enrollment as possible. And so the way that politics works when you have democracy running local school districts is that the situation has to be very dire for the public to understand and for the school board members and the superintendent to have the political clout and support to do unpopular things like closed buildings. Right now, Columbus, my friend, glad that some of these calculations has about the same number of students as San Francisco's school district, but twice as many buildings as San Francisco's school district, for instance. We've known this for over a decade. We've had two or three different commissions to close buildings, to identify buildings to close. And again, this week, they brought these suggestions to the school board and the school board said, no, we're not going to close any buildings. So basically, you just have to wait until the world is about to end to make good decisions or we're going to pass another levy and we're going to increase funding yet again. - Yeah, so that's twice as many principles and twice as many basketball teams. And it's twice as many everything, right? So you just duplicate all of it. We have a lot of that as well. - St. Louis has had to close a lot of schools. There was no question. They had to close the schools. Some of our schools that were built for 1,000 students now have, or 1,500 students have maybe a hundred. They've had to close some schools, but that has come with a lot of heartbreak. And they have said, now we can't have any more charter schools because we have to keep the kids in these schools because they come with funding, right? Like we have to keep these alive because these kids come with funding, so no matter. And in many cases, no matter how bad the schools are too, no matter if their rates of proficiency are below 10%, if 5% of the kids are proficient, those ones we have to really, really keep because they're just going to hurt and already hurting school. And by hurt, they may take the money from it. And I think you're absolutely right. The other thing that we have, which I almost feel uncomfortable talking about because it is such a sympathetic issue is small rural schools. We have a lot of districts with fewer than 100 kids. We have some with fewer than 50. And because we protect their funding, they can never get less state funding than they did in 2005, which is a whole separate issue. But even if it's twice as much as what they should get, they always get their $2,005 amount. And that's shoring up a bunch of these schools and districts that really, that means we have a lot of rural lawmakers who are beholden to these people who keep telling you how important this high school is to their community. Well, if it has a graduating class of eight or 10 kids, at some point, we're going to have to have a talk. (laughs) You know what I mean? - Yeah, and closure is really sad, especially in communities like you're talking about where it's such an anchor in the community to have a school there. It's a path to the middle class. It's for folks who are employed there. And these are really, really tough decisions anywhere. And there are people, it genuinely is painful to them. They feel like they've lost a piece of their soul when they lose their school. So it's not just like a financial sort of consideration. And I get that. The thing that we're not paying attention to is, and this is just how human beings are wired, how good things could be if we manage our finances better today. And so I've had some research in the past on school closures, for instance. And if you're careful about which ones you close, make sure you close the ones where students are learning the least, or they are the most dangerous, or what have you. Those students experience a disruption when their school closes. But as long as you're closing the lowest achieving ones, and those kids disperse to higher achieving schools, in the long run, they are better off, and we're able to track this. And so their learning rate increases dramatically. - I understand in rural areas that can be tough, especially if you're bringing in charter schools or private schools. So it's always a tough decision. But at the end of the day, no one will benefit in the long run through bad financial management. - Yeah, and especially when we finally face the music of declining enrollment and no more federal stimulus money, every dollar is gonna be really important, right? 'Cause we are gonna be talking about a lot fewer of them. And no one Missouri, the state education agency is already said to the legislature, we have a per student amount that because enrollment is declining, they must increase that amount so that no budgets go down, right? So they do not really want to explore in depth the relationship between the number of students and the budget. They're like, gotta keep budgets level 'cause of staffing, obviously, right? But, and I think the legislature is gonna be open to that. And it's incredible. I mean, it's kind of a kicking the can down the road sort of a thing, right? Where it's like at some point, we're not just gonna have more money. So they do want the state to pick up sort of that federal part that's going away. And I think next year's session, and I don't know if this is gonna happen in Ohio, but I think superintendents and school board associations are gonna be down in Jefferson City and mass saying, like, we're suffering and we can't. - Continue to operate under these conditions. How's Ohio's pension system? Is that an issue for you guys? - Not as much as in some other states, but it doesn't look, you know, great. And we already know that that's, you know, not the best way to attract teachers and retain teachers and everyone kind of loses the way that this is structured, yeah. - Yeah, 'cause I imagine like when they have to cut staff, they'll do like a last in first out kind of a thing, right? And those, yeah. - Well, it sounds so gloom and doom. And I wish it didn't. (laughs) You know, I really do, but I wonder if we, maybe I have a colleague who might not agree with me on this, but maybe we should think more carefully about stimulus funding. Like that last ARPA money was insanely high. Missouri got two billion. I mean, it was so much money. I mean, in some cases, 3,000, 4,000 for students in some districts, it's like short up districts. It was half their budget. I think we need to, I would like to think we could think more carefully about that before that happens again, because if you give districts money, and I think in some, you know, I read yesterday that a district in Hawaii, no, a district used stimulus money to go to Hawaii to have a conference, you know, a retreat, I think. You're gonna hear about these things, right? Build a football stadium, whatever it is. But I think when, like for some of our, like I was saying, some of our smaller districts that got these checks of a million or $2 million, that was equivalent to like 10 or 15% of the budget, they probably didn't know how to spend that wisely, right? And so here we are, without clear guidelines, you know, they did what they thought was best, I guess. - Right, about 20% of the money was supposed to be for learning recovery. A lot of it was for mental health. A lot of it was for just opening schools safely. It's hard to quantify the benefits of mental health and opening schools safely. You know, it's not all about the test scores necessarily. - Yeah. - And you're right. I mean, schools didn't know what to do with it. The concern was that they weren't gonna spend their money in time and that they were gonna lose it. And so they were throwing at all sorts of bad intervention. So some of it is, sure, they had to spend it on other things that didn't directly affect learning, but I think a lot of it, I witnessed firsthand a lot of it was, how can we just burn this money? And just, let's talk about tutoring for a second. One of the interventions that we know has, you know, the potential to be effective, we had tight labor markets during the pandemic. And charter schools suffer because they, in Ohio, 'cause they can't pay their teachers nearly as much. Teachers and staff were all going to districts, but even then districts had trouble filling positions because teachers were becoming more expensive because they had other options. The labor market was tight. And so some of it was just bargaining up the prices of staff and teachers and sort of moving the money around within districts. So it was an odd situation. So it wasn't the greatest situation to spend money wisely, for sure. - Well, those of us who study it or like you who teach it, it's gonna be an interesting 12 months to see how it, to see how it comes out and to see where public sympathy is. I don't know, in this case, I don't, what do you think the public will be sympathetic to the, like, oh no, we have to fire teachers. What, make sure that you help us not do that. You think they'll be sympathetic to that? - I guess it depends on their pocket books. It depends how ordinary Americans are doing at that time. It depends how state budgets are going at that time. And it's really hard to predict what the economy, I mean, it's always been hard, but I feel like economists have gotten it wrong the entire time since the pandemic started, right? People have been anticipating recession after recession. And it seems like every time we have a jobs report or what have you, people worry about whether we're gonna have both inflation and unemployment. I mean, if we get a lot of unemployment to go along with this inflation that people are worried about, I'm not sure that they're gonna want to show up school districts. I know some states are committing to leveling up, whatever the money was at the feds, infuse that they're gonna level it up with state funds. I don't think that's a possibility in the vast majority of states. - Right. - Yeah, so I don't think it's looking good. I think for, my bet is that some districts will pass levies, they'll be okay in Ohio. I'm not sure if I'm Missouri or how levies work, they're exactly, but in Ohio, they're constantly on the ballot. So for sure, some districts will succeed, some won't. And those that don't, they're gonna hurt. They're gonna hurt really, really badly. - And not in the kids too. - Yeah, I mean, it's gonna erase, in my mind, it's gonna erase whatever educational benefits were brought from the stimulus money will be more than erased in those districts. It's gonna be even worse. - Well, maybe you can come back in a year and we can talk about it again. I'm going with the benefit of a little bit of hindsight because I've been following this and I guess, within the next few months, we're gonna see it happen. So we'll see. But thank you very much for coming on and giving your perspective on it. Your piece is at the education gadfly. So it's called Ohio gadfly at the Fordham Institute. And I look forward to reading more stuff that you write about it. - Thank you very much. It's nice to meet you. I had a good time. (upbeat music) (upbeat music) (upbeat music) (upbeat music)