Welcome to the New America

By Watson Scott SwailPresident & Senior Research Scholar, Educational Policy Institute

I did some fact checking this morning, and, as of yesterday, the average gallon of gas in the US cost $4.11. That’s over a dollar higher than a year ago and almost three times the price of regular unleaded in 2003. Even at our previous peak during the Iran crisis in 1979, gas was only $3.41 in equivalent dollars. (SOURCES: http://zfacts.com; www.gasbuddy.com). Our readers in California and other select places will surely notice that their gas rates are much higher: in the range of $4.50 gallon. Only two years ago we were mystified at $70/barrel. The US price on July 3 hit a record $143/barrel, and analysts are predicting $200/barrel by year end.

Of course, gas isn’t the only consumable rising. Basic food staples, such as flour and rice, which held steady for most of the past decade, have risen approximately 70 percent over the past year. Some shoppers may not be noticing the price hit as much, but the astute shopper has certainly noticed that the packaging of most goods, beyond produce, has shrunk significantly over the last year. So, while prices haven’t necessarily changed, the price per unit has—dramatically.

The net result of this recent activity is an increase in the average monthly Inflation rate of 4+ percent this year, double that of 2002. And not to pile on, but the housing market in the US is in the tank. The average home price has dropped from $250,000 to $200,000 since 2006, a 20-percent reduction. Again, in certain areas, homeowners would lust for only a 20-percent reduction.

So, what does this have to do with education?

Everything. As most analysts and policymakers clearly understand, when the economy goes south, so does funding for education, whether we focus on K-12 or postsecondary education. For us policy wonks, we have to use generalizations and historical data to show the impact of the economy on education, because data of this type are backlogged compared to other data such, as gas, food, and other CPI-related data.

Historically, we know that education is significantly hit during a recession (and yes, we’re in a recession). States are already starting to feel the pain.

For instance, on NPR this morning, Larry Abramson spoke exactly of this issue in terms of the toll that our economy is taking on education funding. Abramson noted that 22 Michigan districts are facing deficits this year, resulting in major staff layoffs. A representative of the Michigan Association of School Boards said that the first to go are the young, somewhat untenured teachers, who cost, in many cases, 50 percent of what senior teachers are paid. I can’t argue with this action, but you do lose potentially twice as many staff in this type of across-the-board sweep, resulting in a reduction in services to students and certainly an impact on learning outcomes.

Higher education is not immune to the economy, and perhaps is even more subject to the ebb and flow of state and federal funding compared to K-12. Institutions of all types continue to increase their prices at 2-3 or even 4 times inflation, but state funding is the next shoe to fall. California has already cut their higher education funding by 10 percent across-the-board, and other states are or will follow.

Without trying to sound like Chicken Little, education is in for a big hit, I’m afraid. I say this because we’ve seen this train too many times. Education isn’t quite the entitlement people think it is, and even if it doesn’t get cut in the budget, there is a tendency to let it stagnate for years during and after a recession, which essentially is a budget cut when inflation is considered.

Education is falling into the same problem as health care; it is getting more expensive to provide public and private schooling for students at all levels of education, and the resources are getting much tougher to attain.

Understanding that we know that this is the reality, and similarly knowing that this trend has been evolving for some time, I remain dismayed that we seem to be doing little or nothing about it. I’m not seeing the blue ribbon panels on public school funding, or state funding. I’ve seen a few on containing college costs, but they were trees in the forest, for all intent, because they resulted in no pressure on policymakers. The choir can only do so much.

Thus, we need a new conversation in America. We need to have real, sustained conversations with education officials to try and build a more stable and sustainable funding system. We need leadership on this issue, and the leadership is fairly mute at the current time. Perhaps we can do something about it. Keep in touch.

On this note, please have a nice weekend, and don’t use your credit card.

Ps. Did I mention that the national debt is currently at $9.5 trillion?

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