On this week’s Dropout Nation Podcast, RiShawn Biddle discusses how the battle to reform American public education is a war for the lives, futures, and souls of every child — and offers eight mindsets reformers must embrace for long-term success.
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New York City Mayor Bill de Blasio hasn’t had a good year so far. State Senate Republicans, angered over his effort with the American Federation of Teachers’ Empire State affiliate last year to end their control over that legislative body, weakened his control over the Big Apple’s traditional district by extending mayoral control for just another year. De Blasio’s arch-rival for supremacy as the Empire State’s most-powerful politician, Gov. Andrew Cuomo, steamrolled over him during the legislative session, convincing legislators to increase the number of public charter schools that can open, and allowing the Board of Regents to take over 62 of the district’s failure mills if their performance doesn’t improve within a year. Cuomo also made sure to remind De Blasio who was boss last month when he declared that the mayor must prove that he deserves to keep control over the city’s traditional district.
De Blasio’s successful tag-team with public-sector unions and Big Apple political bosses to put Carl Heastie in control of the state assembly didn’t work out as expected: Heastie, who succeeded the notorious Sheldon Silver as Assembly Speaker in February after his indictment on corruption charges, largely gave in to Cuomo’s demands and those of his Senate Republican colleagues. Meanwhile mayor’s unnecessary alliance with the American Federation of Teachers’ Big Apple local, the United Federation of Teachers, has also not proven to be of much value; the local, along with the AFT’s state affiliate, New York State United Teachers, lost big in Albany as Cuomo and school reformers succeeded in enacting another teacher evaluation regime.
But none of those current problems facing De Blasio are as big as the long-term fiscal woe facing him and Big Apple taxpayers: The city’s virtually-busted teachers and school employee pensions. As a Dropout Nation analysis reveals, the pension shortfalls for the Teachers Retirement System and the Board of Education Retirement System continue to increase unabated.
Start with TRS, the larger of the two pensions. It officially reports a shortfall of $25.8 billion (as of 2012-2013, the latest year available), a 3.4 percent increase over the underfunding in the previous fiscal year. But as readers already know, the official numbers do not reflect reality. For one, this doesn’t include $5 billion in unrealied gains that have been left out as part of “smoothing” efforts by the city to avoid dealing with the shocks that come with the volatility of financial markets. If those gains were calculated, TRS’ unfunded liability would be a just slightly more manageable $20.7 billion. Such accounting tricks can either make pensions more-solvent — or in the case of TRS, less-solvent — than they really are, making it difficult for policymakers to make smart fiscal decisions.
The bigger problem lies with the fact that TRS assumes an investment rate of return of seven percent. That’s higher than the six percent median rate of return Wilshire Associates expects over the next decade. In fact, TRS’ rate of return for 2014-2015 so far is just 4.46 percent, or more than two percentage points below the assumed rate, according to data from the New York City Comptroller. As a result of this inflated rate of return, TRS (and ultimately, the Big Apple) understates what is likely the true level of insolvency that taxpayers will ultimately have to bear.
To figure out TRS’ true insolvency, Dropout Nation uses a version of a technique developed by Moody’s Investors Service, which assumes a more-realistic 5.5 percent rate of a return on investments. [Moody’s bases its rate of return on the performance of a bond index, which can range between four and six percent.] Based on the formula, using just TRS’ officially-reported number, Dropout Nation concludes that the pension is underfunded to the tune of $30.9 billion. This is 20 percent more than it officially reports. If the shortfall had to be made up (or amortized) over the next 17 years, Big Apple taxpayers and teachers would have to contribute an additional $1.8 billion a year, or 59 percent more than the $3.1 billion paid into the pension in 2012-2013.
That number, of course, doesn’t include the unrealized gains. Account for those and Dropout Nation estimates that TRS’ insolvency is $25 billion, 20 percent more than the unfunded liability adjusted for unrealized gains. Based on a 17-year amortization schedule, taxpayers and teachers would have to pay an additional $1.5 billion a year, or 48 percent more than contributed to the pension in 2012-2013.
But there’s another catch: Because of the actuarial tricks used by TRS, the pensions assets can be overstated or understated compared to market value. As Dropout Nation noted in its analysis last year, TRS overstated the actuarial value of its assets by $1.1 billion in 2011-2012. This time around, the pension understated the value of its assets on an actuarial basis by $1.7 billion; on a market value basis, the assets are worth $36.9 billion. Subtract that number from the $61 billion in annuity payments owed to Big Apple teachers, TRS’ insolvency would stand at $24 billion. Over a 17-year period, taxpayers and teachers would have to contribute an additional $1.4 billion to TRS, or 46 percent more than what was paid into the pension in 2012-2013.
But TRS’ virtual insolvency isn’t the only pension woe weighing on New York City’s finances. There’s also the Board of Education pension, which is also busted.
Board of Education officially reports a shortfall of $1.6 billion for 2012-2013, an 11.6 percent increase over the previous year. But like TRS, Board of Education’s numbers don’t reflect reality because it also assumes an investment rate of return of seven percent. The pension is only earning 4.86 percent so far into 2014-2015, according to the City Comptroller. Based on the Moody’s formula, which uses a more-realistic 5.5 percent rate of return, Dropout Nation concludes that Board of Education is actually underfunded to the tune of $1.9 billion, or 20 percent more than officially reported. If the shortfall had to be amortized over 17 years, taxpayers and school employees would have to pay an additional $110 million a year into the pension, 47 percent more than the $235 million paid in 2012-2013.
Altogether, the Big Apple must pay down as much as $33 billion in shortfalls for the two school pensions. This, of course, doesn’t include the virtual insolvencies of the city’s pensions for cops, firefighters, and other city workers. How big a drain is that on the city and its traditional district? The two pensions account for 38 percent of the $85 billion in total pension insolvencies facing New York City, according to a Dropout Nation analysis of the municipality’s pension shortfalls, a difficult burden for taxpayers to bear.
The additional $1.9 billion that the New York City would have to pay to bring TRS and Board of Education to solvency over 17 years would have forced the city’s traditional district to devote 27.3 percent of its budget to pensions and debt service on capital projects in 2012-2013, versus the 19.3 percent that those costs actually took up. More than likely, the city would have either had to increase taxes, shut down schools, or reduce the number of guidance counselors and so-called classified staff (including janitors and other employees).
For De Blasio and for New York City taxpayers, matters on the pension front aren’t going to improve anytime soon. The most-recent bull market has helped TRS and Board of Education (along with other state and local teachers’ pensions) avoid even-faster increases in unfunded liabilities. But the financial meltdown in China — whose economy accounts for as much as a fifth of revenues for many companies — is now leading to declines in stock market prices. This bodes ill for TRS and Board of Education, because stocks make up the bulk of their investment portfolios. Because of actuarial smoothing techniques, the likely losses will be hidden on an actuarial basis for at least the next five years, resulting in both appearing in better financial condition than they actually are.
Certainly De Blasio isn’t responsible for much of the mess. The blame can be laid at the feet of predecessor Michael Bloomberg, who struck more-than-generous pension and salary deals with UFT and other school worker union in order to gain support for his otherwise-laudable reform efforts. New York City teachers contribute a mere five cents of every dollar put into TRS, while other school employees pitch in a slightly-higher 17 cents for each dollar contributed to Board of Education. Thanks to Bloomberg’s fecklessness, TRS’ liabilities increased by 84 percent between 2004 and 2013, even as the actuarial value of its assets increased by a mere 6.1 percent; Board of Education’s liabilities increased by a two-fold in that same period while assets increased by just 31 percent. As in the case of other busted teachers’ and school employee pensions, the bet was that stock market gains would cover boosts in pension payouts. It didn’t panned out.
But De Blasio hasn’t exactly helped matters during his two years in office. The contract De Blasio struck last year with the United Federation of Teachers, which increases salaries by 18 percent, didn’t require teachers to contribute more toward their retirements. That the deal included an eight percent salary increase to those teachers who retired from the city’s employ by the end of June 2014 — which led to 777 more teachers retiring last year than the previous period — adds to the city’s pension woes; after all, annuity payouts are based on the salary a teacher earns in the last year before retirement. Given De Blasio’s cold war with Cuomo and Senate Republicans, he can expect no help in the form of a pension bailout.
At this point, De Blasio may only have two years left on a tenure that was never all that promising in the first place. He just as well go ahead and address New York City’s pension woes while he has time.
Hope remains eternal — at least among those who want Congress to pass a reauthorized version of the No Child Left Behind Act being considered by the Senate this week. Even as the likelihood of passage remains as unlikely as it was back in March, when House Education and the Workforce Committee Chairman John Kline’s plan was kiboshed amid opposition from movement conservatives within the Republican majority, there are still some who think that the version under consideration now could pass if Kline’s colleague, Lamar Alexander, can get his plan into conferencing. The fact that conservative Republicans are no more interested in supporting Alexander’s plan than that of Kline (and that there will be pressure on House Speaker John Boehner to reject the entire measure without a single thought) doesn’t seem to factor into their thinking.
But the low likelihood of No Child reauthorization hasn’t exactly stopped Beltway players from the usual gamesmanship that has been a feature of past efforts. This includes the American Federation of Teachers, with the help of another group of so-called social justice players to lobby against the accountability and standardized testing measures that have helped more children gain high-quality education.
Earlier today, a group calling itself Journey for Justice Alliance released a letter to Senate Majority Leader Mitch McConnell and Democrat leader Harry Reid demanding that they pass a version of No Child that eliminates “regime of oppressive, high stakes, standardized testing”. Echoing arguments made last month in the pages of the Hill by Schott Foundation President John Jackson, Judith Browne Dianis of the Advancement Project and wishy-washy education professor Pedro Noguera, Journey for Justice declares with no evidence that testing and accountability has somehow harmed poor and minority kids as well as supposedly “narrowed curriculum” (an argument that has been proven false by research from the likes of the U.S. Department of Education and Quadrant Arts Education Research’s Robert Morrison). As far as the group is concerned, the Senate should pass a version of No Child that eliminates any kind of accountability and spend even more money on a grab-bag of programs that includes “restorative justice coordinators” to reduce overuse of suspensions and expulsions.
Certainly Journey for Justice hasn’t paid much real attention to the Alexander plan for No Child. If they did, they would know that Alexander’s plan would all but solidify the Obama Administration’s move over the past few years to eviscerate No Child’s Adequate Yearly Progress provisions, which have exposed the failure of traditional districts to provide high-quality teaching, curricula, and school cultures to poor and minority children (as well as those condemned to the nation’s special ed ghettos). One can easily argue that the Alexander plan, like the one offered up by Kline, is a roll-back of strong federal education policy back to the bad old days when states and districts were allowed to educationally abuse children black and brown with impunity. For families, especially from poor and minority households, the Alexander plan’s evisceration of accountability makes it harder for them to gain high-quality data on how schools (and the adults who work in them) are serving the children they love.
But none of these points matter much to Journey for Justice’s signatories. Why? Because they are acting on behalf of AFT. This is because nearly all of them are dependent on the union’s financial largesse. And as you expect, this inconvenient fact goes all but unsaid by Journey for Justice in its letter.
As Dropout Nation noted last month, AFT, along with National Education Association, is struggling to gain support for its efforts against accountability (and, more-importantly, standardized testing) from civil rights groups such as Education Trust and NAACP. In order to buttress support for its goals, the union and other traditionalists have had to cobble together a motley crew of progressive groups and social justice outfits almost-totally dependent on its dollars.
The list of AFT vassals signing onto Journey for Justice’s letter such main members of the group as Alliance for Quality Education, which picked up $200,000 from the union and its New York State affiliate, NYSUT, in 2013-2014 alone. Other members include the Philadelphia Student Union (which collected $20,000 from AFT last fiscal year and whose board includes Anissa Weinraub, a flunky with the union’s City of Brotherly Love local), Youth United for Change (another Philadelphia-based outfit which picked up $60,000 from the union last year), and ACTION United, the beneficiary of $49,120 in AFT largesse for helping the union stall systemic reform of the traditional district there. The Annenberg Institute for School Reform, a recent beneficiary of AFT largesse (in exchange for opposing the expansion of charters) to the tune of $49,963), is one of Journey for Justice’s “allied organizations, as is AFT.
Look further down the list of signatories and you see AFT dependents all over the place. One of them is Center for Popular Democracy, which not only received $60,000 in 2013-2014 from the union, it even has union president Randi Weingarten serving on its board. As Dropout Nation readers already know, Popular Democracy has helped AFT in its effort to weaken efforts to expand public charter schools (as well as conceal the fact that the union’s opposition to them is spurred in part by the failures of its Big Apple affiliate to run one properly). Other AFT dependents include the Coalition of Black Trade Unionists (which picked up $5,000 from the teachers’ union last fiscal year), Pride at Work ($5,000 in 2013-2014), New York Communities for Change ($10,000 in AFT funding within the last year alone), and Pride at Work.
Remember: Many of these groups do little when it comes to education policy, advocacy, and institution building — other than feast upon the dues AFT often-forcibly collects from teachers regardless of their desire for membership.
As you would suspect, Schott Foundation, which has become the favored ally of AFT (as well as NEA) in its efforts to condemn poor and minority kids to low expectations, is also a signatory on the letter. Befitting its eagerness to earn every one of the $480,000 it has collected from the Big Two in 2013-2014, Schott’s Opportunity to Learn campaign is also heavily promoting the letter through social media, calling the signatories civil rights groups even though just three such outfits — all affiliates of NAACP (which is supporting accountability and testing) — have signed onto the document. But hey, why let some inconvenient facts get in the way of spin?
Also signing the letter: Ten of AFT’s affiliates and locals — including the United Federation of Teachers and United Teachers Los Angeles. As you probably guessed, they also corralled their vassals to sign onto the claptrap. Chicago Teachers Union, for example, managed to convince its cadre of dependents — including the Kenwood Oakland Community Organization and Pilsen Alliance — to back the anti-accountability letter. UFT brought along the A. Phillip Randolph Institute (to which the union gave $6,550 in 2013-2014), Citizen Action of New York ($5,500), and Make the Road ($5,000 from UFT to the outfit’s political action wing).
The closer you look at the list of signatories, the more you realize that Journey for Justice is just another AFT front group for the union’s other villeins, giving the union (and other traditionalists) cover. All of this for the union on the cheap. Sadly, this isn’t surprising. Given that many of these nonprofits lack the financial wherewithal (even such resources as printers, copying machines, and conference space) to hold meetings and conduct business — and that reformers often fail to extend their considerable resources to help them — it is easy for them to go to AFT and its affiliates for help and even easier to support the union’s agenda in return. That some of these groups are led by middle-class black political and social leaders, who are often more-concerned about defending their pockets and their allies within teachers’ unions (while often refusing to send their kids to the failure mills they are protecting) also factors into their willingness to do work for AFT and other traditionalists.
Yet by supporting AFT’s efforts to eviscerate accountability and standardized testing, these groups are essentially declaring that they care not one bit about the futures of the very black, brown, and poor children for whom they proclaim concern. By siding with AFT, these groups are perpetuating the educational genocide that has wrecked havoc on our children and communities, and have hobbled efforts to end the racialist policies such as overuse of suspensions and expulsions (which many AFT locals, along with those of NEA, vigorously defend).
Your editor would say that Journey for Justice and AFT should be ashamed of themselves. But that would be a waste of breathe. After all, shame requires having a conscience and being willing to turn down money for advocating against poor and minority children.
A philosopher once advised that if you want to know the truth about a society, consider the situation of its least privileged. Which brings us to the South Bronx. The situation of the children there speaks volumes about New York society — and none of it is good.
Just over a third of the Hispanic residents of the South Bronx and just under a third of the Black residents of the area have incomes below the poverty level. Median household income is half and the unemployment rate is twice the New York state averages. Twice the national average of residents over 25 years of age report to the U.S. Census Bureau that they have not graduated from high school.
This last is not surprising. According to the New York State Education Department the graduation rate in the South Bronx (New York City’s District 9) is 56 percent and just 12 percent are considered “college and career ready,” which means that three-quarters or more of those students given diplomas won’t be able to do much with them. Fewer than half of the male Black and Hispanic students graduate, which, given the correlation between education and incarceration rates, means that where the road to life-chances divides, these young men are more likely to be propelled along the route that leads through prison rather than that leading through college.
Why is this? Infantile lead poisoning may contribute. There is little a school district can do about that, beyond screening and treatment referrals. Deficiencies in parental education strongly effect student educational outcomes, as does household poverty. But these last two are, as it were, doors not walls: they are entrances to ways in which educational outcomes can be improved.
If a student’s parents are not highly educated and do not have the economic resources necessary to support the efforts of the school, then the school or other institutions must supply what is lacking. This is increasingly recognized and it is highly laudable that New York City is making an immense effort to provide preschool for all four year-olds. But that is not enough.
Children in households in, say, the upper quarter of the income distribution come into a world surrounded by books, a world in which nearly every toy is in some sense educational. They are read to incessantly and by two-and-a-half or three are being schooled in one way or another, in play groups, preschool, kindergarten, library programs. If these resources cannot be supplied by the impoverished adults of communities like the South Bronx, they must be supplied by the city and its schools.
Once in school, preferably through the gateway of all-day, literacy-oriented kindergartens, the children of the South Bronx must continue to be supported by this emulation of middle class education: challenging, high standards, lessons during the school day and late into the afternoon, on weekends, during the summer; well designed, well maintained, well equipped schools; good meals, health care. None of this is brain surgery (although all of it is typically recommended by neuroscientists). In a city like New York, where $20 million apartments are purchased for weekends or as student housing for the children of billionaires, finding the money for this is only a matter of the will to do so.
A particularly important factor in education—we all know this—is the quality of teachers. In many developed countries, such as the UK, it is axiomatic that the most effective teachers are to be found in the schools serving the students who most need them. What is the situation in District 9, where, surely, the students need highly effective teachers?
The New York State Education Department reports that while 83 percent of teachers in the district are “Effective,” just 5 percent are “Highly Effective.” In District 2, in Manhattan, 17 percent of the teachers are rated as highly effective. We need not get into the complicated issues of teacher ratings to notice that a student in District 2 is three times as likely to have a better than average teacher than a student in the South Bronx. What is going on here? Why is it that these students most in need of excellent teachers are least likely to have them? And what does it say about our society?
It has not always been the case in this country that household poverty condemned children to impoverished educations. It was once our pride that the schools were enriching, open doors through which the children of factory workers and peddlers could pass on their way to more satisfying lives. Increasingly they are not doors but barriers: unaffordable colleges, under-resourced schools. This is the road to generations of increasing inequality, a future in which the South Bronx is not unusual but the typical environment for all but the most privileged.
Featured photo courtesy of Brett Carlsen.
These days haven’t been all that heady for the Chicago Teachers Union. With the Second City’s cash-strapped traditional district demanding a seven percent pay decrease for teachers as part of a new contract, the AFT affiliate may pay an even higher price for backing the unsuccessful candidacy of Cook County Councilman Jesus (Chuy) Garcia over Mayor Rahm Emanuel (as well as the union boss Karen Lewis’ four-year-long effort to halt systemic reform). With Emanuel essentially guaranteed the top job for as long as he chooses, Lewis must figure out whether to moderate the union’s militancy (at a cost of losing support from the hardcore traditionalists that put her in office) or adopt an even harder edge.
But don’t think CTU has no weapons for a long fight with Emanuel at its disposal. It has plenty. One of the little-noticed of them is its eponymous foundation, which has morphed from a barely-funded affiliate that doled out scholarships to a key backer of the union’s allies.
The Chicago Teachers Union Foundation doled out $1 million in grants in 2013-2014, according to its filing with the Internal Revenue Service. That’s 12,661 times greater than the $80 in grants it handed out in the previous fiscal year. This is thanks to $1.3 million in investment income in 2013-2014, an increase from the zero dollars it had generated a year earlier.
The foundation’s grantees include many of the Chicago AFT local’s key allies in its efforts against the school reform efforts championed by Emanuel and predecessor Richard M. Daley. Kenwood Oakland Community Organization, the progressive outfit which also received $60,000 from the national AFT in 2013-2014, received a $30,000 grant from CTU Foundation last fiscal year. Pilsen Alliance, another group who has been a loud and vocal backer of CTU’s opposition to Emanuel’s regime, also received $30,000 from the union’s foundation. CTU Foundation handed out a $30,000 to Action Now Institute, an education advocacy outfit which has been active in the parent union’s protest marches; last week, Action Now joined together with CTU, Pilsen, Kenwood Oakland, and a branch of the influential Amalgamated Transit Workers Union to protest the district’s proposed contract terms.
Much of the money given out by CTU Foundation is going to the Second City’s neighborhood associations, nearly all of whom are membership-based (and therefore, unlike your typical homeowner’s association, not necessarily representative of everyone in those communities). This includes Brighton Park Neighborhood Association, which participated alongside CTU and its other vassals in last week’s protest; it collected $30,000 from the union’s foundation last fiscal year. Another neighborhood group, Blocks Together Chicago based out of the Humboldt Park neighborhood, received $20,000 last year, as did Enlace Chicago, which is based on the mostly-Latino Little Villages Neighborhood.
A big winner: Southwest Organizing Project, which is based in the Second City’s southwest side communities. CTU Foundation gave it a direct grant of $20,000, while giving $50,000 to its Grow Your Own Teachers initiative. The latter program, part of an effort in Illinois to help communities to help parents and other non-traditional types get into classroom teaching, is certainly admirable. But let’s remember that it can also help CTU gain new activists within its rank-and-file.
But CTU Foundation’s giving extends beyond those small groups. Raise Your Hands for Illinois, which is pushing against the use of standardized testing and student test score growth data used in teacher evaluations the union opposes, picked up $20,000 from the foundation last fiscal year. Illinois Justice Foundation, which funds progressive efforts, also collected $20,000 from the foundation last year. And the Network for Public Education, the outfit headed up by once-respectable education historian (and Lewis pal) Diane Ravitch, picked up a $20,000 grant.
CTU Foundation’s more-activist giving is a 180-degree change from past years. Long-dedicated to handing out scholarships to children of CTU’s rank-and-file — it gave out $13,000 of them last year (or little more than the $12,000 ladled out in 2012-2013) — the foundation became a key arm of the union’s political efforts two years ago. Under Lewis, who presides over its board, the philanthropy sold some of its real estate for $12.7 million, then began redirecting those proceeds toward the union’s favored few.
Considering that many neighborhood associations and small nonprofits lack the financial wherewithal (even such resources as printers, copying machines, and conference space) to hold meetings and conduct business — and that reformers often fail to extend their considerable resources to help them — the grants from CTU Foundation (along with the other help provided by CTU itself) are more than enough to win them over to the union’s cause. Little wonder why CTU has managed to portray itself as some sort of grassroots outfit even when information (including April’s mayoral election runoff results) say otherwise.
CTU Foundation’s political in all but name spending may work in the union’s favor, so long as it doesn’t run afoul of the federal tax man. After all, the Internal Revenue Code (along with private letter rulings and other IRS decisions) prohibit philanthropies affiliated with organizations from funding activities that provide more than an incidental benefit to parent organizations. Given the strong ties between CTU and the outfits funded by the union’s foundation (and the even closer ties between Lewis and Ravitch), you can easily argue that the union is getting more than an incidental benefit from the spending.For reformers in Chicago, as well as compatriots in the rest of the nation, the spending activities of the CTU Foundation show that it makes good sense to take a look at how foundations affiliated with AFT and NEA affiliates (as well as those of the parent unions) are using what are supposed to be public benefit dollars for what could be their own private purposes beyond just a little publicity.