How Schools Can Follow the Money That Should Be Theirs

Originally published in The American Prospect on December 19, 2018.
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Less than two months ago, hundreds of Baton Rouge educators voted to stage a walkout in protest of requests by ExxonMobil for millions of dollars in local property tax abatements. Working in conjunction with a faith-based group, Together Baton Rouge, the teachers called on the state to direct the proposed corporate subsidies back into public education. ExxonMobil has defended its tax breaks as necessary to create a stable and hospitable business climate.

Unlike teachers in Baton Rouge, who learned of the oil giant’s exemption from their state’s longstanding Industrial Tax-Exemption Program, most jurisdictions have lacked any real picture of how much money public schools are losing, or could lose, due to corporate tax abatements.

That all began to change in 2015 when the Government Accounting Standards Board, a private organization that sets professional standards for public-sector bookkeeping, issued a new rule requiring state and local governments to disclose corporate subsidies on their annual Comprehensive Annual Financial Reports (CAFRs). The Government Accounting Standards Board—“GAZ-bee,” for short—does not have legal authority, but most municipalities abide by its guidelines because doing so can help them get better credit ratings and lower interest rates. The new rule—known as GASB Statement 77—took effect in 2016. So now, for the first time, the public can finally get a broad look at the corporate giveaways that impact public education.

Armed with data from the new accounting rule, Good Jobs First, a national nonprofit that tracks corporate subsidies, put out a report this month finding that at least $1.8 billion was given away by state and local governments over the last fiscal year to attract businesses, money that otherwise would have gone to public schools. Good Jobs First tracked giveaways in 28 states, and suggests the total estimate for corporate abatements was likely much higher, since not every state and locality complied with the new reporting rule.

“While some school board members have been aware that their districts are losing money through abatements, hardly any knew how much,” says Scott Klinger, the primary author of the report. “This has been completely invisible money that they’ve been losing for years.”

The report examined financial reports of more than 5,600 of the nation’s 13,500 school districts, and found that school districts in ten states accounted for the vast majority of the (disclosed) tax giveaways: South Carolina, Louisiana, New York, Ohio, Oregon, Missouri, Pennsylvania, Michigan, Texas, and Georgia. Beyond that, Good Jobs First found that almost 250 school districts in 22 states each lost more than $1 million in revenue due to corporate tax giveaways last year. “If abatements were curtailed and the resulting tax revenues were reinvested to hire additional teachers (at each state’s average teacher salary rate), the ten most affected states could hire a total of 28,059 more teachers,” the group concluded.

Good Jobs First predicts more states and localities will comply with the new rule as time goes on, and recommends governments adopt better data reporting practices that would more easily facilitate public understanding of the information. The organization also recommends that states pass laws to prohibit tax abatements from adversely affecting school funding, something Alabama and Florida already do.

Randi Weingarten, the president of the American Federation of Teachers, cheered the new Good Jobs First report, and cited her union’s work in pushing the Governmental Accounting Standards Board to change its disclosure rules. “We will continue to fight for the funds kids and communities need and expose how these handouts hurt kids’ futures,” she said.

Klinger says he’s optimistic that the disclosures will bring about change, though it can take time. “More and more legislators are beginning to question the value of business subsidies,” he said. “A few years ago people would only say that subsidies are good, that they bring jobs. Now people are saying ‘I’m not so sure’ and I think Amazon has been a big awakening for that.”

So next time when a school board or mayor or state official says they can’t afford to raise teacher salaries, or improve classroom-based technology, or repair crumbling schools, the public can point to the specific dollar amounts of corporate tax giveaways that are draining money each year from their children’s schools. “By disclosing the money,” says Klinger, “it allows a different kind of conversation to happen.”

 

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