Friday, June 8, 2012

Government Shell Games In Illinois Education

Today let's look at applying the subsidiarity principle (in any organization, authority and responsibility to do the work should reside at the lowest level of competency) in comparison with  the pass-the-buck "shell games" by Illinois government officials. 

{Here's a valuable lesson that I learned as a teenager about playing shell games at a Chicago amusement park. Don't play them. You'll soon be out of money.}

We'll look at Illinois K-12 education and a few of the financial issues associated therewith today. There's a larger lesson therein for all of us in lots of areas.

Schools take heavy hit in new Illinois budget was sent along by my friend Sid:

"Illinois schools would lose $210 million under the state budget approved by legislators last week, meaning Illinois will fall even further behind in providing the “foundation level” of basic funding for each student.

Free meals for poor students and early childhood education also would be cut back if Gov. Pat Quinn signs the budget into law, which he began doing Thursday with a bill that mostly makes adjustments to the current budget. Colleges, state parks and health care for the poor all face cuts, too.

“The budget awaiting the governor’s action is painful, and the Illinoisans who will be most hurt are those most in need,” concluded the advocacy group Voices for Illinois Children. . . .


The key measure of spending on elementary and secondary education would be cut by $210 million, or 3.1 percent. When reductions in federal funds are included, the reduction tops $855 million.

State government is supposed to ensure a basic amount of money is available for all students, whether they live in rich districts or poor ones. That foundation level for the coming year is $6,119, and the budget cuts would mean Illinois provides only 89 percent of that amount, down from 95 percent last year.

The number of children getting help from early childhood education programs will fall sharply. Nearly 7,000 children lost services in the last round of cuts, the State Board of Education says, and now the service is slated to lose an additional 7.6 percent of its funds.

This year, the state will help provide about 194 million free or low-cost lunches to needy children. That service faces a 45 percent cut next year."

Discussion and Analysis 

The foregoing is all about cuts in budgeted funds for public education. Not one word about available revenues. When I was raised, the lesson was we coudn't spend what we didn't have. Thus, we had to know how much we had before we could hope to decide how much we could spend. And once the size of the pot was known, stark choices in the face of scarcity would be required with respect to where we'd spend out limited funds.

Later when I helped run various businesses, the same principle of living within our means applied. First, we predicted revenue and then chose how much of that revenue we could and would spend, and where we would spend it or for what we would save it, as we chose and as circumstances dictated.

So question numero uno to be answered is how much total money is available to be spent, and in what areas. Of course, the answer to that in turn depends on how much revenue there will be, and how big the area of responsibility.

That is, are we talking wages and/or salaries and/or retirement benefits and/or transportation and/or buildings and maintenance and such? And are we limiting the discussion to a school district, city, park district, state, a nation or what? 

Only then can we ascertain how much money as a whole we'll have to spend and how many choices with respect thereto we'll have to make.

Yesterday we discussed the $85 billion unfunded pension fund liability and normal pension annual costs for Illinois public employees, many of which are school employees, including teachers, custodians and the like. Their work cuts across various government entities, so we clearly don't know how much of that $85 billion applies to schools.

Government Shell Games

Government officials are debating about who to stick with the pension and related bills that are coming due. Of course, the shell game being played is intended to escape political responsibility for the lack of total funds to meet total prior promises made. Hence, the "public servants" will now try to pass the problem on to various others, including local school districts. 

It's also going to be the state versus Chicago versus downstate versus school districts versus employees and all of the foregoing versus the poor helpless and uninformed taxpayers. All in the name of fairness and what sadly has become the great American shell game.

For sure, compared to the rest of the players in this shell game, taxpayers are the innocents. Perhaps Rip Van Winkle type sleeping  and/or naive innocents, but innocents nevertheless.

How Big is Big?

But how big is the financial problem facing Illinoisans anyway? Well, it's huge, but that's about all we know for sure.

To know exactly how huge, however, we first need to know how much money there will be available to spend. And while that's impossible to discern by reading the various articles about Illinois government's ongoing financial dilemma, we do know the $855 million being cut from federal and state coffers doesn't represent real money saved. Not at all. 

Instead it's actually borrowed money from China or elsewhere (because of state and federal shell games played regarding local school district funds) if we follow the REAL money trail. Or perhaps it's simply the future tax bill that will be owed, but the money doesn't exist now. And that UNREAL money of $855 million we're "cutting" from the budget is just for the elementary and secondary schools, exclusive of special funds for the needy.

Why so? Well, the above article says that the state's budget for "elementary and secondary education would be cut by $210 million" and "when reductions in federal funds are included, the reduction tops $855 million." It also reveals such things as "free or low cost lunches to needy children . . . face a 45 percent cut next year."

My Take

In addition to the city's taxing authority, local communities  have school districts, park districts and other taxing entities as well. In fact, local schools receive on average more than 50% of their revenues from state and federal government, with the vast majority of that coming from the state government. Local property taxes play a prominent role as well. Of course, Illinois gets money from the federal government, even though the federal government has no money to give. See what I mean by political shell games. They're played wherever government exists. Taxpayers Beware!

To clean up this mess, transparent zero base budgeting has to be implemented. Zero base simply  requires that budgeting begins with a clean and blank sheet of paper. 

Next comes the principle of subsidiarity. The subsidiarity principle dictates that authority to do the required work should reside at the lowest level of competence. 

Thus, local schools, local communities and local park districts should run their own "railroads" as a single railroad. And raise their own funds as a single taxing entity, too.


But in Illinois, single railroad running is not possible today, since nobody's in charge locally. 

The federal and state governments are the primary sources of funds, but they're broke.

In the state, medicaid (nursing homes) and K-12 education are the biggest components of state spending.  However, states and the federal government split medicaid costs about 50/50 with the federal government setting the rules of the road. And with respect to K-12 education, most of the shots are called at the state and regional level, and the federal government has a great deal of influence as well. The local community doesn't have much authority at all.

What about applying subsidiarity to the local community? Why aren't they in charge? They used to be. And MOM says they'd do a great job of making informed choices and living within their means. It's time to get non-local government knows best bureaucrats out of the local game.

When I grew up in small town America, we had good schools and we didn't have non-local government agencies trying to run our schools from a distance. 

They didn't establish salaries, pensions or otherwise for school employees or administrators. And if the local community wanted to build a building, a gym or put equipment on a playground, hire a summer coach to help Little Leaguers or teach kids how to play swim, then that's what they did. 

Local We the People decided what to do as well as how to pay for it.

Functional approaches to managing any organization are largely wasteful. By that I mean the community should have control of its affairs and conduct its operations holistically.

We will never possess all the money we'd like to spend, so we apply scarce resources to established priorities and make locally informed decisions. That's subsidiarity in action.

Summing Up

Illinois is in a fiscal crisis. As are Greece, Spain, Portugal and California. 

Taxpayers and citizens will do the right thing if given control, accountability and transparency.

First, however, they need to be able to see the whole picture and the naked truth.

Unfortunately, government officials don't want to share that naked truth and perhaps aren't even aware of it themselves.

Government elitists spending OPM have made an enormous mess of things, because when spending OPM, there's never going to be enough to spend.

With MOM thinking firmly in place, we begin with how much we have and then stay within those boundaries by making choices in the face of scarce resources. 

And we do it together at the local level rather than breaking up into distant, separate functional and parochial decision making, OPM spending entities.

Our schools can perform well, our teachers can be paid well, our poor can be fed well, and our elderly can be cared for well.

But not with big and bureaucratized government knows best leading the way.

It's really up to We the People, so let's insist that the hide-the-ball shell games be stopped and that the entire picture be painted accurately and entirely.

Then we'll do what's right --- and we'll do it together.

Thanks. Bob.

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