Schools are not a loan

an 'indecent' proposal

On April 23rd, the School District of Philadelphia announced that there will be a $1 billion shortfall in its budget over the next five years due to the crisis.

The district was in pretty good shape for meeting immediate costs: before the pandemic it had a $167 million balance sheet in the black. But now that local liquor taxes and state budgets are caving, that's turning into a deficit.

But I’ve been reading about finance. And I’ve got a question.

We know the Federal Reserve has opened a lending facility to buy municipal bonds (the MLF, municipal lending facility). These are short-term (two year) revenue anticipation bonds with low interest. SDP has issued many bonds in the past. In fact, it issued $481,080,000 of them recently.

I think the SDP should issue some more bonds. In fact, I’m feeling angry enough that I’d propose it issue $6 billion of bonds to the MLF. $4.5 should go to the infrastructure deficiencies that, among other things, are causing cancer in the schools. $1 billion should go to the shortfall caused by the pandemic crisis. $500 million should go towards the new labor contracts due for negotiation next year.

Then, I think SDP should demand humane terms for this loan and, if those terms are not accepted, it should refuse to pay the loans back and demand to have them abolished.

Given the historic decision this week recognizing a federal basic minimum right to literacy, there could be legal standing for the refusal.

Ideally, poor school districts around the country would organize and do this in solidarity. Schools are not a loan. It’d be very difficult for the Fed to reject a coalition of school districts.

Perspective

Taking out loans from the Fed and then getting cavalier around terms and servicing is an ‘indecent’ proposal. Not paying your debt is reckless, obviously. But I’ve had the Debt Collective organizers in my head for awhile and that’s probably why I’m thinking of it.

And yet. When workers refuse to work and demand better conditions by striking, they can win huge victories for the working class while putting themselves and others at great risk. Violence, instability, and loss of moral authority come with the territory.

The tradition of civil disobedience more broadly is another perspective to consider. Of course there are laws and rules that must be obeyed, and disobeying them is not only wrong but can be hurtful. And yet laws and rules may be propping up much greater violences than a concerted, limited breaking of them.

Usually it makes sense to stop at red lights. But when there’s an emergency, ambulances go through them. What if we treated the situation with Philly schools like it were an emergency?

Education debt

Gloria Ladson-Billings is one of the best known critical race theorists of education (she’s also a Philadelphia native and former public school teacher). She talks about the idea of “education debt,” which she defines following the economist Robert Haverman:

The education debt is the foregone schooling resources that we could have (should have) been investing in (primarily) low income kids, a deficit which leads to a variety of social problems (e.g., crimes, low productivity, low wages, low labor force participation) that require on-going public investment.

Ladson-Billings unpacks the concept in terms of historical, economic, moral, and sociopolitical aspects of this debt.

In Philadelphia, the debt has manifested most recently in asbestos poisoning throughout the district's buildings, forcing schools to close and teacher and students to get sick. That’s because of infrastructure deficiencies that prevented proper asbestos removal.

So one measure of Philly’s education debt—what Philly schools are owed— is $4.5 billion. That's the infrastructure deficiency the district faces on top of all its other costs, which, all told, probably amount to $6 billion.

Collect the debt

So the question emerges how to collect this debt. In Pennsylvania, many doors are shut for those seeking relief. The state courts are a long, somewhat stacked and uncertain path. Some, like the Public Interest Law Center, are pursuing this path.

The federal courts are shut after a series of Supreme Court cases making it impossible to address funding disparity. The federal government has little control over school funding.

The state government is controlled by Republicans and Democrats rarely provide hope if they are in power.

The city government can do little but tax already low-valued property at higher values, increasing the costs of an already burdened population.

Movements have made exciting and promising demands. But if you combined all the existing demands from the movement ecology in Philadelphia (start a public bank to save on fees and interest, end the 10-year tax abatement on new commercial real estate, AFT’s fund the facilities program, getting UPenn to pay PILOTs, etc) they do not add up to $6 billion in the short-term. They don't even add up to the $4.5 billion needed for infrastructure, which needs to happen now.

So how do you come up with $6 billion for Philadelphia schools? If Bernie Sanders had become president there would have been a path maybe where, in a Green New Deal, we could have a line item for school infrastructure, but that's not happening.

I personally favor regional tax-sharing using the Twin Cities model. But again, the political will is hard to find and it would take a long time.

So, what do you do? I’d say one way is to become monetarily confrontational, using available funds provided by the Federal Reserve in the pandemic crisis.

By 'confrontational' I mean something like civilly disobedient and try to collect the education debt that Philadelphia is owed by whatever means necessary. In crafting that kind of strategy, I would look to precedents of leaders who decide—for better or worse—to become monetarily confrontational in rectifying debts resulting from unjust structures.

Precedents

There are precedents for this kind of action. Two come to mind, one local the other international.

1) In 1998, David Hornbeck, the superintendent of Philadelphia Schools, decided to fully fund the district. He wanted to cover every cost necessary until his budget ran out. The schools closed before the end of the year because there wasn’t enough money to keep them open. He was trying to make the point to Gov. Tom Ridge that the district faced severe funding inequality.

2) In 2008, Rafael Correa, the President of Ecuador, declared that his country would default on International Monetary Fund loans in protest against the austerity measures attached to them. He called them “immoral and illegitimate.”

Each of these cases is an example of the kind of monetary confrontation that would be required for Philadelphia to collect what it is owed. They are precedents for the kind of action I think might be necessary to combat the ongoing structural violence occurring in the school district (and other school districts).