What Is A Real Investment In Education?

John Marshall Lee, co-founder of a fiscal watchdog group attending a variety of government public meetings, shares an essay that examines the city’s investment in public education.

Public budgets are things of wonder. The City Charter calls for the presentation of a balanced budget each year along a certain timeline process. A balanced budget indicates that the City pay current expenses with current dollars from a variety of revenue sources. Bridgeport will close out the 2010-11 budget year which it entered with an $8 Million deficit that was to be “efforted” towards balance by the end of the year, June 30, 2011.

Union concessions around pay and contribution towards healthcare benefits were sought to fill the above gap. State and Federal funds were used to balance City taxpayer contributions. Some were a regular part of the City budget like State of CT educational cost sharing (ECS) grants. But significant Federal funds were present for a year or two as economic stimulants, and then would be history.

The 2011 budget carried no property tax increase (although Mayor Finch claimed on tax notices that the entire 1 mil Library Budget, passed by City voters,= over his opposition, was such an increase.) City taxpayers have been generally quiet in the press and at public meetings.

The fact is that taxpayers will not know what the City accomplished this year until the 2010-11 fiscal year is audited and presented to the public eight months later in 2012. Footnotes in that audit will again indicate that the City underfunded the Pension A obligation (with permission, but no money provided, by the State of CT). Footnotes next February will also indicate an increase of more than $20 Million in our retiree healthcare account, bringing it to around an added $80 Million, or 10% of the City $800 Million Other Post Employment Benefit (OPEB) liability first publicized in 2007. Mayor Finch and “company” have done nothing material or positive to address this liability. And failing to fund “minimum actuarial liability” for Pension A and failing to fund current actuarial OPEB costs indicates an unbalanced City budget anyway!

In the current year process, the Board of Education has failed to fashion a budget and place it in the City process for the 2012 year. The City posted last year’s budget numbers in its stead. During the past month those who share concern for the education of City youth have been involved in lengthy meetings on multiple weeknights, attempting to get at the truth of Board of Education finances and plans. Zigging and zagging announcements from the Mayor’s office as well as Superintendent Ramos’s office confuse understanding further. At this moment the City is approaching the State for understanding and money. No layoffs. No school closings. No announcements of union cooperation. Nothing.

So let me offer you two sets of numbers to ponder. And let you contemplate the meaning of these numbers just as in school where you were asked to “compare and contrast.” The numbers are real. In 2000 the City borrowed $350 Million to fund Pension Plan A (for the benefit of around 900 public safety retirees or their survivors). Since 2000 the City has paid around $30 Million per year towards the principal and interest repayments. This will total over $900 Million by 2029 partly because of the 7.64% interest rate agreed to. All Mayors have paid this since 2000. All City Councils have approved the budgets where these numbers currently appear in the police and fire budgets. In addition, the Mayors and Councils have funded an average of $2 Million per year into the actual Pension Plan A investment fund for the past decade, not enough to maintain it in the face of market losses and $32 Million payouts to retirees each year.

Now the school numbers in very rough form: Let’s assume the City has 20-22,000 students. Let’s further assume the total education budget approximates $220 Million annually. And let’s factor in that the City receives around 80% of its operating costs from the State of CT ECS. Do the math. Each student’s expense is around $10,000 annually on average, and the cost to the City is around $2,000 per student annually on average.

A Citywide view of budgets should be expected from a responsible Mayor’s office. How does it look to you? A commitment to some of the City retirees is currently funded at an expense of $35,000 per beneficiary per year (and that does not include a share of the retiree healthcare liability.) And the education budget is allowed to be fumbled and mismanaged and cause confusion and anger in families who care about their youth where the City is responsible for raising and spending only $2,000 per beneficiary per year.

What type of long-term leadership has brought our City to this terrible and tragic fiscal point? Is it a consideration for City ratings in credit markets more than a commitment to young people to prepare them for their future? Is it a general ignorance in the voting or non-voting taxpayer base about how money is spent or where it goes? And would more information on public scoreboards make a difference, letting you see who is winning and who is left behind? If you want scoreboards with timely reporting, Bridgeport, you are going to have to ask for them loudly and often.

John Marshall Lee
30 Beacon Street
Bridgeport CT 06605