The DeHavilland Blog

Friday, September 26, 2008

Economist predicts more pain ahead

More information on our current and expected economic circumstances comes from the Public School Forum of North Carolina, which reports on a presentation by one of the directors of the Center for Economic and Policy Research:

Nationally Recognized Economist Predicts More Pain Ahead
This Tuesday NC Policy Watch and the NC Justice Center hosted a “Crucial Conversation Luncheon” with Dr. Dean Baker, co-director of the Washington, DC-based Center for Economic and Policy Research. Dr. Baker is one of the nation’s most visible, prolific and coherent voices for progressive economic policy change. He has authored and co-authored dozens of books and articles, including The United States Since 1980 (Cambridge University Press, 2007) and The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer (Center for Economic and Policy Research, 2006).

With the current financial crisis, Dr. Baker’s presentation, entitled “America after Bush; What the next president must do to build an economy that works for all” sent shockwaves through the NCAE auditorium. His main speaking points included:

2009 Recession (we have a long way to go):
  • The housing bubble will continue to deflate
  • Commercial market has peaked
  • Financial Sector experiencing big losses (mortgage & other debt)
  • Consumption will fall
  • State and local government spending will contract
  • Unemployment will rise above 7%

Housing Market:
  • Currently 10 month supply of new homes on the market
  • More than 11 months for existing homes
  • Rentals are at record high vacancy rates

Mortgages / Lending:
  • Less subprimes (at one time made up 25% of loans)
  • Tight down payments (higher rates and no more second mortgages)
  • Loss of equity (20% of babyboomer homeowners will have zero equity in home in 2008)
  • Less trading up in the housing industry

Economy / Job Market:
  • Since January 2008 more than 100,000 jobs a month have been lost
  • Banks – no new loans
  • Savings rate since 2004 has been less than 1%. Expected to rise (meaning GDP will fall)

“Good News” – Reform:
  • This will punish Wall Street
  • Get the dollar down; more toward balanced trade
  • Fix healthcare

We've entered a different world than we've seen in the past 50 years in terms of school funding - the days of annual increases in government spending are over, and it's time to adjust and not hold out hope that this is a temporary glitch. Most of the reaction I've seen to date has focused on cutting costs, and of course that's appropriate - I just hope that school and district leaders also consider increasing support from alternate sources, such as community partners.

Monday, September 22, 2008

Why aren't they talking about funding?

School funding continues to feel the pressure of tighter local and state budgets, and I doubt that's going to change anytime soon; in fact, in terms of government funding, the days of annual increases may be over for good.

With property taxes making up such a large percentage of K-12 funding, the current foreclosure situation and related deflation in housing values are resulting in signifanctly reduced revenues; the broader economic slowdown, coupled with greatly increased energy prices, will only exacerbate the problem. It could be years - even decades - before the housing market hits its previous highs, and by that time, other growing expenditures, such as Medicare and Social Security, will be demanding an ever-larger piece of the pie.

For schools that want to supplement resources with foundation and nonprofit support, the news isn't much better.

According to the Center on Philanthropy, giving declines 2% in bad economic times, with education and the arts taking the biggest hit. And then there's this from USA Today:

Foundations and non-profit groups that invest in the stock market are getting battered by recent Wall Street volatility.

Hardest hit are community groups that rely on both endowments and donations, which are also expected to decline, says Sigurd Nilsen, director of policy research for the Council on Foundations. The council represents about 2,200 grant-making foundations.

In a survey the council released in May, 52% of the community foundations that responded said they plan to distribute less grant money next year because of the economic downturn. Nilsen says the results still apply.

I've been posting more on this situation than any other lately; it's not that it's the only issue worth discussing in education (though it is important to the partnership initiatives I work with). The reason I keep hammering on it is because it seems that no one else is. If you go look at the debate around just about any issue in education today - teacher compensation, rigor, student performance, or anything else - you won't find anyone acknowledging the current and future changes in the funding landscape, and how they affect what's possible and what's prudent.

Hopefully people will start incorporating this issue into their work; great plans with no funding are less than helpful at a time of real needs.

Update: And just how bad is it out there? Here's the district situation in Dallas and the statewide situation in Hawaii and Florida...

Friday, September 05, 2008

1 in 5 students - now Latino

US News reports on a new Pew study with some surprising numbers:

Since 1990, the number of Latino students nationwide has nearly doubled, reaching 10 million in 2006. That number is expected to swell to 28 million by 2050, which would mean Hispanic students will outnumber white children in public schools, according to the study. Today, 1 in 5 public school students is Hispanic.

The population (and particularly the K-12 population) continues to become more diverse, and at an accelerated rate. The American Academy of Pediatricians has found that by 2020, 40% of our school-aged population will be comprised of children from minority groups, and by 2025 whites will barely retain their majority status, at 52.6%.

This is occurring in the context of decades of disparities in the performance of the major student groups, at a time when we have renewed our commitment to educational equity and when we are putting accountability systems in place to show whether or not we're living up to our promises.

Bottom line: we're going to have to do something radically different if we're going to bring these populations up to proficient levels as they grow to make up an ever-larger percentage of the student population.