St. Paul Companies Are Spending Their Tax Breaks on Super Bowl Sponsorships. Teachers Are Crying Foul.

Originally published in The Intercept on January 26, 2018.
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With more than a million people headed to the Twin Cities over the next 10 days for the Super Bowl, local corporations, St. Paul school district officials, and civic leaders are bracing for what may be a public relations nightmare: the first teachers strike in St. Paul in over 70 years.

The St. Paul Federation of Teachers, nine months into its contract negotiation, authorized a strike vote for January 31. The move comes amid the union’s unconventional strategy of linking declining school funding to corporate tax cuts and narrowing in on local companies on the Super Bowl Host Committee as a potential source of funding for the cash-strapped school system.

The argument the teachers are making in their contract negotiations is straightforward. Cuts, they say, are not the answer. The school district’s financial situation can never really improve until corporations start paying their fair share. In particular, teachers are focusing on the companies that make up the founding sponsors of the Super Bowl Host Committee – companies the union says have avoided paying $300 million in state income taxes over the last five years alone.

The companies say they have made up for some of that with donations, but the generosity has limits. According to a public records request filed by the teachers union, only seven of the 25 Super Bowl Host Committee founding partners donated to the St. Paul public school district last year – for a total of $1.1 million. All 25 companies, by contrast, paid $1.5 million to be founding Super Bowl partners.

Nick Faber, president of the St. Paul Federation of Teachers, stressed that the 3,700 educators in his union do not want to go strike. What they do want, he said, is to see the school district commit to supporting changes to the state tax code, under which corporations have enjoyed massive breaks in recent decades.

Last March, the St. Paul Public Schools announced that it faced a $27 million budget deficit, necessitating staff and program cuts to a district that had already been slashing art, music, and gym, with nurses, librarians, and social workers in short supply. It’s a familiar, vicious cycle – the state reduces its funding for public schools, which also lose revenue when students leave for charters, and districts suffer even more cuts and budget strain.

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December 2017 report: SACKED: How Corporations on the Super Bowl Host Committee Left Minnesota’s Public Schools Underfunded and Under Attack.
Chart: St. Paul Federation of Teachers

The wealthiest Minnesotans have seen their taxes decline over the last four decades. Back in 1977, they paid 18 percent in state income taxes. Over the next 36 years, the legislature reduced that top rate to 7.85 percent. In 2013, the state legislature bumped it back up to 9.5 percent, a move strongly opposed by the state’s influential business leader coalition. With the decline in income taxes has come a drop in real per-pupil state aid, which remains “significantly below” what districts received in 2003. While some of the major local corporations make voluntary philanthropic donations to public schools, the teachers union says those contributions have never come close to the amount the businesses have saved in reduced taxes.

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Chart: North Star Policy Institute

To try and shift the conversation around public education, the St. Paul Federation of Teachers has been highlighting tax havens, loopholes, corporate subsidies, and executive compensation. For example, in a report it published in December, the union noted that 3M – a technology company headquartered in St. Paul – holds $1.4 billion in offshore tax havens, including in places like Hong Kong, Panama, and Switzerland. Likewise, the union said, UnitedHealth keeps over $700 million in overseas havens like Bermuda and the Cayman Islands, citing a 2017 report by the Institution on Taxation and Economic Policy.

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December 2017 report: SACKED: How Corporations on the Super Bowl Host Committee Left Minnesota’s Public Schools Underfunded and Under Attack.
 Chart: St. Paul Federation of Teachers

Kathryn Wegner, an education studies professor at Carleton College and a parent of a student who attends Groveland Park Elementary in St. Paul, has been active in supporting the union’s efforts to highlight corporate tax avoidance. She has joined teachers for rallies outside of banks downtown and been educating other families and community groups about the fiscal situation.

“At my kid’s school, we lost the kindergarten teacher aides, then a librarian, then the music teacher, and our four kindergarten classes went down to three, bumping up class sizes,” she told The Intercept. “Parents are getting upset and wondering how to make sense of it, and understanding the historical context around corporate tax rates has been really useful to grasp the disinvestment.”

The teachers union has been asking corporate leaders to meet with them since October, and finally last week, they had the chance to sit down with representatives from EcoLab and U.S. Bank. At those meetings, the union asked for the companies’ partnership in pressuring state lawmakers to adequately support public education – specifically the state’s unfunded special education mandates.

“They said no,” said Faber. “The only way the state could really close the gaps would be to tax them more.”

U.S Bank did not return The Intercept’s request for comment.

Mesa Denny, an Ecolab spokesperson, told The Intercept that the company does not consider the situation “to be a dispute,” and it is “merely trying to correct the inaccurate and untrue information” promulgated by the teachers union.

“Ecolab believes that strong public schools are vital to a healthy community, and that’s why we have supported the St. Paul Public School System for more than 30 years,” Denny said. “Over the last five years, the Ecolab Foundation has provided more than $3.6 million to the St. Paul Public Schools, supporting strategic imperatives outlined by the school district leadership. Given that we are headquartered in St. Paul and many of our headquarters employees live in St. Paul, we are happy to devote our foundation dollars to these efforts.”

But those donations, Faber said, are not enough to bridge the school funding gap that was created in part by tax cuts. “Given how much school funding has declined, philanthropy just can’t have a real transformative change when we’re so underfunded on a basic level,” he said. “We can’t just accept little grants from corporations; we have to start thinking differently.”

The teachers want the school district to join them in pressuring local corporations to pay more. So far, they say, district officials have refused. Laurin Cathey, human resources director for St. Paul Public Schools, did not return The Intercept’s request for comment.

To address the budget deficit, the school district has proposed that teachers agree to applying to “Q Comp” – a voluntary state program established in 2005 that theoretically could bring up to $9 million to St. Paul schools. But even if St. Paul did apply, the state already distributes all the money it has allocated for the program, so no money would flow to St. Paul unless the legislature decided to appropriate more money. And even if the state did bump up funding, 22 Minnesota charter schools and school districts are ahead of St. Paul in line for the money.

Tyler Livingston, acting director of school support at the Minnesota Department of Education, told The Intercept that St. Paul would not be allowed to jump ahead of the other districts waiting for money if it applied for Q Comp. “The law says explicitly that applications are treated in the order they’re received,” he said.

The union says it is not holding its breath that the state will increase Q Comp funding, especially not during an election year. “The money just isn’t there,” said Faber, “and even if it were, Minneapolis is a Q Comp district and they have a budget shortfall about the same as ours or greater, so obviously Q Comp isn’t going to really address this problem.”

In addition to corporations, the union wants to see wealthy nonprofits, like local colleges and hospitals, pay their fair share in taxes. According to St. Paul’s mayor, a third of the city’s properties are exempt from property tax.

One option is to establish a so-called Payment in Lieu of Taxes, or PILOT, program – something that exists in more than 200 cities, towns, school districts, and counties across 28 states. PILOTs are essentially initiatives to induce tax-exempt institutions to make voluntary payments to the cities in which they’re based. A civic task force formed last year to explore the idea and released a report in September, emphasizing that PILOTs “cannot – and should not – be viewed as a ‘solution’ to St. Paul’s significant budget gaps or long-term financial challenges.” A representative from Citizens League, the Twin Cities public policy group that published the report, did not return a request for comment.

“It’s really frustrating to our members that while HealthPartners” — a local health care provider and insurance company — “avoids taxes and doesn’t want to talk to us about PILOTs, they’re charging us through the roof for our health insurance,” said Faber.

The potential upcoming teachers strike would be the first since 1946, when the St. Paul Federation of Teachers went on strike for six weeks – the first organized teachers strike in U.S. history. The union also voted to strike in 1989, but ended up reaching a last-minute agreement that mooted the strike.

The St. Paul teachers union is considered among the most progressive teacher locals in the nation. Since 2013, it has joined with other progressive unions to organize under the banner of “Bargaining for the Common Good.” Inspired by the Chicago Teachers Union strike in 2012, unions like St. Paul’s have taken a different approach to their contract negotiations, partnering with local organizations to bring a wider range of community-oriented demands to the bargaining table.

Last spring, the union released a report to evaluate how much progress it had made toward reaching the goals it set for itself in 2013. While highlighting some real accomplishments — including reducing student-teacher ratios for low-income students and expanding full-day pre-K programming — the SPFT acknowledged that without more sources of revenue, it would be impossible to really tackle its agenda.

The report helped form the demands the union has since been pushing for in its contract negotiations. The union’s very first proposal is in line with its pre-Super Bowl campaign: a commitment from the school district to push major local corporations and nonprofits to increase revenue for St. Paul Public Schools and support “changes in state tax policy to make these contributions sustainable over time.”

“We’re hoping to see some movement from the school district so we don’t have to take the next step,” said Faber, meaning the strike. Faber says the district can continue to accept corporate charity, but it needs to push them to also “be better neighbors.”

That’s a very different kind of pressure, he said, “and that’s hard work, but I don’t think we have any other choice.”

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School Desegregation Lawsuit Threatens Charters

Originally published in The American Prospect on January 26, 2015.
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Alex Cruz-Guzman, who came to the United States from Mexico as a teenager, lives in a poor, minority neighborhood in St. Paul, Minnesota. Determined to provide his five children with a quality education, he and his wife were able to send their two oldest daughters—who are now in college—to desegregated St. Paul schools. But it’s become more difficult to find such schools in St. Paul today, and the Cruz-Guzmans were told they would likely be unable to send their three younger children to integrated institutions, even when they offered to transport their kids themselves.

So Cruz-Guzman became a plaintiff in a lawsuit—one that may shape the future of American education. Filed against the state of Minnesota by two veteran civil rights attorneys, Daniel Shulman and his son John Shulman, the suit accuses the state of allowing schools with high concentrations of poor and minority students to proliferate. A 2015 Minneapolis Star Tribune analysis found that elementary school students in the Twin Cities attend more racially segregated schools than they have in a generation. Children who attend such schools, the lawyers argue, achieve far less than their peers in integrated institutions. The lawyers also say that the growth of charter schools, which are even more racially segregated than traditional public schools, have exacerbated these trends.

The Shulmans are seeking a metro-wide integration plan to satisfy what they argue is the state’s constitutional obligation to prevent segregated schooling. They cite the state constitution’s education clause, equal protection clause, due process clause, and the Minnesota Human Rights Act to make their case.

Not everyone agrees that this kind of integration is legally necessary or the best way to meet children’s needs. Some see the suit as a threat to parents’ right to choose the schools that would best serve their children. This is particularly true for parents of color, who sometimes send their children to charters in the hopes of avoiding what they see as hostile traditional schools.

John Cairns, one of the most experienced charter school attorneys in the nation, is working against the lawsuit. “If the state is going to do anything, then they’d have to attack parental choice,” says Cairns. “While the plaintiffs are inexplicit about what their remedy would be, in our view, they’re explicit that their remedy would address charter school enrollments. The only way they could do that is to have some conclusion that parental choice is unconstitutional.”

Daniel Shulman sees in this argument an echo of Plessy v. Ferguson. He thinks charter school advocates are arguing, in effect, that separate schools can be equal. “We don’t think that’s true or the law. If they follow the law, they’ll say separate is not equal, and not equal is inadequate,” he says. “All the data will support that … test scores, graduation
rates. School segregation is a national tragedy and disgrace.”


It’s fitting that this fight would take
 place in Minnesota
, which is both the birthplace of the charter school movement, and a longtime champion of civil rights.

Minneapolis enacted the nation’s first fair housing and fair employment ordinances, and Minnesota passed one of the first state laws banning housing discrimination. In 1948, it was an impassioned speech to the Democratic National Convention by Minneapolis Mayor Hubert Humphrey that led the Democratic Party to pass its first civil rights platform plank. In the early 1970s, under a court order, Minneapolis moved to integrate its public schools. This prompted the state to issue desegregation rules applicable to schools across the state. By the early 1990s, Minneapolis and St. Paul had not a single racially segregated school, and the Twin Cities metropolitan area was one of the most desegregated regions in the United States.

“We had no segregated schools because we had strong civil rights laws and we enforced them,” says Myron Orfield, a law professor at the University of Minnesota and the director of its Institute on Metropolitan Opportunity.

Today, the educational landscape looks quite different. While the number of people of color living in the Twin Cities metropolitan region—defined as Minneapolis, St. Paul, and the surrounding suburbs—has increased considerably over the past two decades, integration advocates say that demographic shifts alone are insufficient to explain the growth of segregated schooling in Minnesota.

And grown it has. Since 2000, the number of elementary schools in St. Paul educating more than 90 percent students of color grew from 2 to 18, while the overall percentage of students of color in the district rose only 11 percent. Similar shifts occurred in Minneapolis. In 1995, the Minneapolis School District was 63 percent nonwhite, but had only two elementary schools that were 90 percent segregated. Today the district has 13 such elementary schools, and 26 percent of district students attend schools with over 90 percent students of color.

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The demographics of the 164 charter schools in Minnesota—which roughly 50,000 students attend—have also impelled the state to argue, for the first time, that charters should no longer be exempt from state integration laws. (An administrative judge will rule on this separate dispute in late February.)

The resegregation of the region’s schools, critics say, was the product not just of demographic change but also of conservative pressure in the 1990s to weaken desegregation mandates, coupled with the rise of a charter sector that targeted specific races and ethnicities, thereby accelerating the isolation of poor and minority students. The growth of charter schools, they add, also created new opportunities for white children to congregate in separate schools. Charters attended by predominately white students grew by 40 percent between the 2007-08 school year and the 2012-13 one. Researchers found that more than half of these white charters are located in attendance zones with racially diverse traditional schools.

Opponents of the state’s proposal, and of the Shulmans’ lawsuit, argue that their proponents—state officials, Myron Orfield, and his allies—misapply the label of  “segregation” when talking about charter schools. “I find it offensive and insulting to compare parents of color making choices to send their kids to schools that are better addressing the academic needs of their kids with segregation, a system that was set up by white supremacists decades ago to force students of color to inferior schools,” testified Alberto Monserrate, the first Latino ever elected to the Minneapolis School Board, in early January.

Whether or not one thinks these schools should be considered segregated, the rise of schools with high concentrations of racial minorities—both in traditional schools and in charters—means an increase in the number of schools serving high concentrations of poor students. Researchers at the Institute on Metropolitan Opportunity find the poverty rate at Twin Cities minority-segregated schools to be two-and-a-half times greater than the poverty rate at integrated schools, and five times greater than the poverty rate at predominantly white schools. They also find that math and reading test scores for black students at highly segregated schools are lower than test scores for black students at less segregated schools. Suspension rates, too, are substantially higher in racially segregated elementary schools than in less segregated ones.

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“Yes, there’s a difference between segregation that’s imposed by the state versus segregation that is through choice, the first is worse than the second,” says Richard Kahlenberg, a senior fellow at The Century Foundation and a longtime researcher of school integration. “However, the negative effects of concentrated poverty obtain even when concentrated poverty is a matter of constrained choice.”

 

This is not Daniel Shulman’s first time filing a school segregation lawsuit against the state. In 1995, Shulman sued Minnesota, arguing that segregated schools in the Twin Cities metropolitan area violated both the state and federal constitutions. The case settled five years later, and as part of the settlement, Minnesota established a voluntary integration program between Minneapolis and ten neighboring suburban districts. Most participants were poor minority students who enrolled in predominately white suburban schools.

“But the segregation in Minneapolis and St. Paul is worse today than when I started the first case 20 years ago,” says Shulman. “That’s why I brought the case again, and I’m sorry I waited this long to do it.”

Shulman’s legal strategy rests on a theory that, at this point, is still very much untested. In the past few decades, it’s become increasingly difficult for civil rights advocates to win federal school desegregation lawsuits. Following the 1978 Supreme Court case Milliken v. Bradley, courts began to draw sharper distinctions between de jure and de facto segregation; the Supreme Court said unless it could be shown that a district deliberately sought to discriminate against students by race, it could not be held responsible for school segregation.

“Federal desegregation rulings are about racial discrimination, which looks at intent to discriminate,” says Derek Black, a professor at the University of South Carolina School of Law, who studies education law and policy. “Since the 1980s and 1990s, it’s become more and more difficult to prove intent, which means more and more districts have been released from their desegregation obligations.”

By suing the state, rather than the federal government, the Shulmans aim to bypass all those sticky questions about intent. “What they’re saying is that the actual existence of segregated schools creates an educational harm, and the state ought to correct that harm, regardless of why it came about,” explains Black.

Their strategy has been tried once before, in a 1989 Connecticut lawsuit known as Sheff v. O’Neill. The plaintiffs argued their constitutional rights were violated because the concentration of African-American students in a particular district was a violation of the state’s right to equal education.

The case made its way up to the state Supreme Court, and in 1996, the justices ruled that Connecticut had an affirmative obligation to provide its students with equal educational opportunity. This constitutional right, they concluded, necessitated providing students with integrated educations, and so the state moved to establish an array of voluntary integration options.

Though Sheff is not controlling law in Minnesota, it is expected that Minnesota judges would consider it if they adjudicate the Shulmans’ suit. “I think the more courts that say an idea is a good one, the more likely it is that courts that follow after them will agree,” says Black, pointing to school funding lawsuits as an example. However, Sheff was notably litigated before the rise of charter schools.

In 1993, Minnesota’s Supreme Court ruled that all students are guaranteed a fundamental right to an adequate education. In their new suit, the Shulmans seek to argue that no education could possibly satisfy the state’s adequacy requirement given the highly segregated environments.

Lawsuit opponents argue that “adequacy” should be measured not by the composition of student bodies, but by demonstrated achievement. “What we’re saying is the first thing to look at is whether kids are learning, not who is sitting in the classroom,” says Cairns, the attorney representing the charters. “And once you establish that kids are learning, then that’s the measure of an effective and adequate education.”

Derek Black says most states do consider achievement “outputs” when determining whether students are receiving adequate educations. Such outputs could be scores on standardized tests, graduation rates, or college readiness measures. Though variance exists from state to state, Black says most courts would look at both outputs and inputs. “The question would be whether the failure to provide certain inputs is the cause of an inadequate education, as measured by various outputs,” he says. If Minnesota’s judiciary takes up this groundbreaking case, they will have to decide whether racially and economically integrated schools are necessary inputs.

“I think there’s an increasing recognition that equal education is the constitutional responsibility of state governments, and therefore [states] have to promote policies to avoid racial and economic segregation,” says Phil Tegeler, the executive director of the Poverty & Race Research Action Council, and a leader in the National Coalition on School Diversity. Tegeler hopes lawyers in other states will follow the Shulmans’ lead. “We really need to see more creative, affirmative litigation,” he says.

“This is huge, you could potentially have 50 state lawsuits on this issue,” says Kahlenberg.

Opponents of the lawsuit, and of the state’s plan to include charters under statewide integration rules, say that there’s been a fundamental misinterpretation of what segregation is. They deny that charter schools targeting specific races or ethnicities are illegal or unjust. Rather, they say, these schools provide students with “culturally affirming” environments in which to learn.

Bill Wilson founded one such “culturally affirming” charter in St. Paul—known as Higher Ground Academy. Though Higher Ground’s student body is more than 90 percent East African immigrant and low-income, it’s one of the highest performing schools in the region. Advocates say the school’s success is due to its unique, and culturally sensitive education strategies. “I know people who brought this lawsuit against the state use the word ‘desegregation’ but let’s find the intentional action,” Wilson says. “I won’t call this segregation, I won’t call it racial isolation, because it’s not true.”

“It’s a false analysis that’s being applied to culturally specific charter schools, that tends to consider those schools to be segregated,” testified Nakima Levy-Pounds, the president of the Minneapolis NAACP chapter. “That flies in the face of civil rights history and also the fact that we have historically black colleges and universities around the country that are specifically designed to affirm, enrich, and enhance the educational experiences of African-Americans who we know have faced historical discrimination throughout our time in this country.”

Darrick Hamilton, an urban policy professor at The New School, says his research suggests there certainly could be instances where predominately black schools may be better learning environments for black students. Quoting W.E.B. Du Bois, he says, “The Negro needs neither segregated schools nor mixed schools. What he needs is Education.”

Even among those in the Twin Cities who advocate for integration, the civil rights community remains torn over how to think about charter schools.While the St. Paul NAACP welcomes the Shulmans’ new lawsuit, for example, its leaders have not taken a position on their charter school argument, or on whether charters should be exempt from statewide integration laws.

“It’s hard enough to get a broad coalition of people to say we want to integrate the schools, and when you add the charter school issue, the politics just become much more challenging,” says one Twin Cities civil rights leader. “There are definitely some advocates who say we should focus on desegregating the traditional schools, and if the districts can get their act together then demand for charters will [naturally] go down, because parents will trust that traditional schools can take care of their kids.”

But researchers at the Institute on Metropolitan Opportunity say that segregated charter schools perform even worse than segregated traditional schools. With the exception of a few high performing networks—including Bill Wilson’s Higher Ground Academy—they find that most charter schools that serve high concentrations of impoverished racial minorities produce poorer academic results than traditional schools, even after controlling for variables like poverty and race. The Minnesota Star Tribune also found that slightly more than half of all students in Minnesota charter schools were proficient in reading, compared to 72 percent in traditional public schools.

Defenders of “culturally-affirming” institutions don’t spend much time talking about white charter schools. Yet white charters are on the rise.

“One of the problems with allowing culturally-focused schools to become single-race enclaves is that, once you create a legal justification for these schools, it becomes very difficult to prevent white parents from adopting the same language to create white segregation,” says Will Stancil, an attorney with the Institute on Metropolitan Opportunity. “Integration isn’t about exposing kids to some magic aura of whiteness, it’s about the importance of universal inclusion in education: providing all children full access to the teaching, resources, and networks that the most privileged kids currently have.”

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Those who do support including charters in the lawsuit and under statewide integration rules point to a “Dear Colleague” letter that former Secretary of Education Arne Duncan sent around in 2014. Duncan’s federal guidance said charters must be included in court-mandated or state-administered desegregation plans.

“You just can’t exempt charter schools from the basic civil rights laws of the state, they’re supposed to be publicly funded public schools, and they should be subject to the same civil rights requirements as other public schools,” says Phil Tegeler. Myron Orfield says Minnesota is the only state that he knows of that explicitly exempts charters from its civil rights laws.

The rhetoric surrounding these legal battles will likely grow even more charged in the coming weeks and months. By the end of February an administrative law judge should make her final decision on whether charters will be exempt from statewide integration rules. However, if the Shulmans ultimately win their lawsuit, some say this could render any charter school exemptions moot.

“I think ultimately the lawsuit could trump the rule,” says Derek Black. “It could require the state to do a whole variety of things.

Daniel Shulman isn’t worried about what the judge will decide with regards to charters and the state rule. “It would be nice if there were a rule that effectively desegregated Minnesota’s schools—that’s one way the state could begin to remedy the result of its past constitutional violations,” he says. “But this rule is not going to effect the lawsuit.”

The state of Minnesota has filed to dismiss Shulman’s lawsuit, and a judge will consider this motion in a hearing in April. (A spokesperson for the Minnesota Department of Education told The American Prospect that they cannot comment on the case, but is “committed to helping every student achieve academic success.”) If the case is not thrown out—and it can be appealed, if it is—then the trial will likely be scheduled for late 2017.

“I know for a lot of leaders it’s convenient to not do anything or to not talk about these issues, but for the children who are kept separate, it’s wrong,” says Cruz-Guzman. “We feel we’re doing the right thing by bringing the lawsuit.”

Minnesota is not the first state to wrestle with the challenges of balancing school choice and desegregation. And it surely won’t be the last. Cairns, who serves on a litigation panel for the Alliance of Public Charter School Attorneys, says that he and his colleagues recognize the “wide-ranging implications” of this case. Though it’s not a federal suit, Cairns believes its outcome will be “hugely important to provide direction” to the rest of the country.