I will protect your pensions. Nothing about your pension is going to change when I am governor. - Chris Christie, "An Open Letter to the Teachers of NJ" October, 2009

Monday, December 31, 2012

Kids Pay For Christie's Incompetence

Like so many other denizens of the Garden State, it makes me nuts to watch Governor Chris Christie touted as a fearless leader and maker of tough decisions in the national press. Because the man is really, really bad at his job:
A report submitted this month by the state Department of Education to the Legislature is likely to set the stage for another school-funding debate next year. For many local districts, the outlook is not good. 
The Educational Adequacy Report repeats many of the proposals suggested last year by Education Commissioner Chris Cerf. If accepted by the Legislature, they would reduce extra funding districts receive for low-income, bilingual and special-education students. 
Advocates for those students already are gearing up to lobby the Legislature in January to reject the report. Lawmakers have 90 days to make a decision, or the proposals take effect. 
The report also again recommends eliminating so-called adjustment aid over five years, which would reduce aid to many districts in Atlantic, Cape May, Cumberland and Ocean counties. According to state data, adjustment aid for 2012-13 totaled $36 million in Vineland, almost $15 million in Pleasantville, nearly $14 million in Millville, $8 million in Atlantic City and $6.5 million in Lower Cape May Regional. [emphasis mine]
For the last three years, New Jersey has been on a rollercoaster ride when it comes to school financing. After immediately cutting taxes on the rich (yes, he did, stop trying to blame Corzine), Christie started his term by next promising to limit cuts in school aid to districts; he then proceeded to hack and slash at school budgets all across the state, including the suburban towns where his political base sends their kids to school.

Those suburbanites got in an uproar about cuts to favored programs in their beloved schools. And the courts ruled that cuts to the cities violated New Jersey's legal obligation to provide adequate funding to urban schools. So Christie had no choice but to reverse course and start funding schools again. Where did he get the money?

Give the man credit: he pulled the slickest trick you could possibly imagine. In the name of both "fiscal responsibility" and "bipartisanship," he got together with conservative Democrats and passed a public employee pension and benefits bill that allowed him to delay making a full payment to New Jersey's already woefully underfunded pensions for seven years. He ran around the state claiming he was the governor who was finally telling the truth to greedy public employees; what he really did was put off the state's legal obligations for another day.

The local punditocracy, however, loved it. And not just because Christie's bill also increased pension payments for teacher and cops, and froze benefits for current retirees; no, what gave the local wags a special thrill was the idea that public employee unions had suffered a defeat. Nothing is more important to the local New Jersey op-ed writer than humiliating unions, especially the teachers union. The plan was obviously fiscally irresponsible and a blatant broken promise on Christie's part, but no matter: it was screwing the NJEA, and that's all that counts.

Well, now Christie has to deal with the mess he made:

New Jersey’s pension contribution may consume almost one-fifth of its annual budget by 2018 under a law enacted by Republican Governor Chris Christie, according to a group led by former Federal Reserve Chairman Paul Volcker and Richard Ravitch, the former New York lieutenant governor.

The contribution must rise by about $4.5 billion over the next five years, from $1.03 billion in 2013, to comply with the 2010 law, the State Budget Crisis Task Force said in a report. A $5.5 billion payment equals two-thirds of the school aid in Christie’s spending plan for the year that began July 1. [emphasis mine]
Forget 2018; how's Christie going to get enough money to make the payment in 2014? The payments are based on a ridiculous rate of return on current investments of 8.25%; there's no way that's going to happen. Worse, Christie has a bad habit of way overestimating tax revenue, and then calling more conservative projections "blatantly political."

So he's painted himself into a corner: revenues are down, pension payments are looming, he's promised not to raise taxes on the wealthy, growth in the state is anemic, his political base doesn't want him touching their schools, he's said conservative revenue projections are politically motivated, and he's already screwed over public employees once. What choices are left?

Well, the first thing to remember is this: Chris Christie studied at the feet of the master:

Whenever George W. Bush had to confront his horrible economic and fiscal record, he pulled out 9-11, the Iraq War, or Katrina as his excuse. Luckily for Christie, he had a big natural disaster plop right down in his lap this past fall:

Governor Chris Christie said he’s evaluating whether to cut New Jersey’s budget for the current fiscal year, while the state reported revenue trailed targets by 11 percent last month, citing the effect of Superstorm Sandy.

Receipts fell short of projections by $183.7 million in November, as Sandy’s floods and coastal destruction deterred shoppers and gamblers. Income-tax collections missed targets by 11 percent, the Treasury Department said in a statement. By Nov. 30, fiscal 2013 revenue was $451.2 million, or 5.6 percent, lower than estimated in the $31.7 billion budget.

Before the November revenue report, Christie, a 50-year-old Republican in his first term, said tax collections may rebound in a few months as Sandy rebuilding continues. Such an increase may offset the need for spending cuts, he told reporters in Newark, the state’s biggest city.

“After Sandy, we very well may need to; we’re evaluating” possible budget cuts, Christie said. “If we need to, we will. Our state was essentially closed for the month of November.”
What a load of crap. First of all, Christie had an obligation to prepare for a natural disaster like Sandy and the fiscal chaos that would ensue - he didn't:
The state’s economic activity ground to a halt in the storm’s aftermath. As a result, revenue streams like sales, income, gas and casino taxes are expected to dip, placing additional stress on an already strained budget. Revenue grew modestly in the first three months of the fiscal year that began in July, but is still $175 million, or 4 percent, less than Christie projected. Revenue would have to grow more than 10 percent in the remaining months for the governor to hit his target.
Making matters more difficult, the budget allowed for a safety net of less than $500 million.
[emphasis mine] 
Nice work, Guv; way to plan ahead.

Second, it's all of his Republican buddies in Congress who are holding up federal aid that would help NJ with the financial mess. But what's really galling here is that Christie had already created a fiscal disaster long before Sandy hit the state. The revenue before Sandy was less than Christie was projecting. But like his mentor, don't expect Christie to acknowledge this sad fact; instead, expect him to flounder around with contradictory economic claims that betray his ignorance, all while using disaster as a political excuse:
“My view is that before the disaster, we had plenty of room to do a tax cut and that we should because it would be a stimulant to the economy and helpful to middle-class families in this state who need more money in their pocket,” Christie said at a briefing held at a new Federal Emergency Management Agency joint operations center in a vacant office building in Lincroft. “I don’t think that’s reduced the need for that. The question is what will the revenue picture be. I’ll wait to see the numbers as they come in.”  
“Unfortunately, I think we should have done it already,” Christie said. “If we had, people would have money in their pockets right now and be able to spend it. It would help the economy as well but the Legislature chose not to do it.” 
The tax cuts, however, were not scheduled to go into effect until Jan.1, which means residents would not have said [sic] any money yet.
So the tax cuts would have been good to have now, except we can't afford them now, so they wouldn't be good to have now. And they would have helped the economy, except we wouldn't have had them yet anyway.

That's logic worthy of Sarah Palin.

In any case, Christie never talks about raising taxes on the wealthiest people in this state, even though we have the second-highest income gap in the nation. And there's no way he's going to raise taxes on or cut school spending for his political base in the 'burbs. What to do, what to do...

And so we get back to school aid. The plan is to cut aid to schools, but to put the majority of the cuts on the backs of the poorest children in New Jersey - children whose parents weren't going to vote for Christie anyway. Thus, we trot out the old argument designed to salve the guilty consciences of conservatives everywhere: when it comes to schools, money doesn't matter:
Cerf’s report focuses on funding, saying the state’s efforts at education-finance reform have not generated academic results, and that the academic achievement gap between low-income students and those who are not economically disadvantaged is still wide. 
“New Jersey cannot spend its way to educational success,” Cerf states as the thesis of the report. He adds that the state has spent billions of dollars in the former (urban) Abbott districts only to see large portions of those districts’ students continue to fail. Cerf states that how well money is spent matters as much as, if not more, than how much is spent. 
The report has been criticized by Rutgers Graduate School of Education professor Bruce Baker, author of the schoolfinance101 blog, who notes that New Jersey’s achievement gap is in line with its income gap. In a lengthy blog post, complete with charts, he shows that New Jersey has the second-widest income gap in the nation, after Connecticut, and says it is reflected in student performance. He adds that while money is not everything, nothing can be achieved without it. [emphasis mine]
This is the last argument Christie wants to hear - and yet hear it he must. Baker's post makes clear that New Jersey's commitment to equitable school spending has substantially improved the educational outcomes of the state's poorest children. And he's not alone:
David Sciarra, executive director of the Education Law Center, which has represented children in the state’s poorest districts, said the organization’s first goal will be to convince the Legislature to reject the report.
The Legislature did reject the proposals last year, but the state aid proposed by the governor included the changes, and the final state budget did reflect a loss of aid to some districts.
Sciarra also disputed Cerf’s efforts to make the debate about money, saying the Abbott v. Burke Supreme Court decisions did not just allocate more money to urban districts, but required that they use it to develop specific programs, such as preschool. He said some achievement gaps have narrowed, and New Jersey schools overall do well.
To say simply that all we’ve done is spend money is absurd,” Sciarra said. “And the court was very clear that the state had the responsibility to make sure districts are using the money effectively.” [emphasis mine]
It is absurd - but we live in absurd times. Commissioner Cerf has been running around the state all year trying to make the case that New Jersey spends too much on its poorest students. He thinks focusing on "teacher effectiveness" and "turn around strategies" and "charter expansion" is the key to improving urban education.

I actually think Cerf believes this idiocy. But his real goal is to justify Christie's fiscal strategy of cutting school aid to the poor.

Make no mistake: this is yet another example of how corporate education "reform" is nothing more than a distraction. Promoting these failed policies is they way conservatives can justify our extreme income inequity and historically low taxes on the wealthy. Chris Christie may have learned at George W's feet, but he is hardly alone.

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