Tag: budgets

Districts Spend Up to a Third of Their Payroll on Pensions. What That Means for Budgets

Mary Pat Campbell

Link: https://www.edweek.org/leadership/districts-spend-up-to-a-third-of-their-payroll-on-pensions-what-that-means-for-budgets/2022/09

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Excerpt:

In at least some states and school districts, the share of pension costs now amounts to nearly a third of payroll, concludes a new analysis from Moody’s Investors Service, a credit-rating firm.

The gradually increasing burden of retirement costs on districts isn’t a new phenomenon. But the latest analysis is a good reminder of how pensions act as the third rail of district and state school finance—even if the average educator, parent, and principal doesn’t know a ton about their complexities.

Retirements don’t directly have much to do with the instructional quality students receive, but indirectly, they have a lot of impact. Cash going into these systems generally means it’s not going toward building improvements, teacher pay, learning materials, or programs.

Author(s): Stephen Sawchuk

Publication Date: 12 Sept 2022

Publication Site: Education Week

ILLINOIS SPENT 6% MORE THAN IT TOOK IN FOR 15 YEARS, SO COVID-19 HIT IT HARDER

Mary Pat Campbell

Link: https://www.illinoispolicy.org/illinois-spent-6-more-than-it-took-in-for-15-years-so-covid-19-hit-it-harder/

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Excerpt:

From 2005-2019, Illinois revenues totaled just 94% of expenses. The state ran deficits in each of the 15 years prior to the COVID-19 pandemic. Only New Jersey overspent more.

Illinois was one of only eight states to see spending outpace its revenues from 2005-2019, leaving it fiscally ill-prepared to deal with the tumultuous COVID-19 pandemic, according to new data from The Pew Charitable Trusts.

Illinois ranked No. 2 for overspending.

According to the report, Illinois took in just 94.1% of the revenues it needed to cover its expenses from 2005-2019. That number was second worst in the nation, coming in just ahead of similarly troubled New Jersey.

Author(s): Justin Carlson

Publication Date: 12 Jan 2022

Publication Site: Illinois Policy Institute

Deficits Don’t Matter—Until They Do

Mary Pat Campbell

Link: https://www.city-journal.org/deficits-dont-matter-until-they-do

Excerpt:

The big misunderstanding here is that, though structural changes are certainly persistent and less responsive to policy, they are not permanent. Conditions are always changing. Productivity transforms economies, and so do shifting age structures and demographics. Foreigners are already losing their appetite for U.S. debt; much of it is now bought by the Fed or by banks required to hold it for regulatory reasons. Thus prices may not be as revealing as we think.

And we can’t be sure that debt monetization won’t unleash inflation or higher interest rates. The Fed buys bonds from the banks and credits them with reserves. Eventually banks may want to spend their reserves, and the Fed will need to sell some bonds—which could increase interest rates, or increase inflation, or both. The world could also discover a new safe asset, like German stocks. For many years, gold was considered the only safe asset, and it was unimaginable that a fiat currency could be safe.

Structural changes happen more often and much faster than people realize. We could come out of the pandemic in a new regime of less trade and more reliance on tech that could change debt and price dynamics in ways that we don’t yet understand.

Author(s): Allison Schrager

Publication Date: 12 February 2021

Publication Site: City Journal