As states slash public sector, Washington reluctant to act

For tens of thousands of the nation’s teachers, it is the start of an endless summer. In the past month, the Los Angeles Unified School District has sent pink slips to 693 employees. The Detroit school system has laid off 1,983 teachers, including Michigan’s 2007 teacher of the year. And Greensboro, N.C., has received national attention for firing or reassigning more than 500 teachers in a district serving just 71,000 students.

The Obama administration has estimated that school districts across the country this year might lay off as many as 300,000 employees, many of them teachers. That would be five times the number of layoffs in 2009 and ten times the number of layoffs in 2008.

These pink-slipped teachers are just the first and most noticeable wave of public-sector employees getting the chop as states slash budgets. As state and local governments prepare to begin their new fiscal year on July 1, they are frantically laying off not just teachers but social workers, firefighters and police officers. Oakland, Calif., is firing 80 police officers, more than 10 percent of the current force. New Jersey and New York are bracing for state-wide cuts in governmental offices.

The layoffs are generally the result of lost tax revenue in the recession but particularly due to lost stimulus money. Last year the federal government provided Recovery Act funds for states to make up their yawning budget gaps. (Every state save for Vermont is required to keep a balanced budget.) This year, Congress has declined to step in.

It looks like 2010 might be the annus horribilis for the states, according to the Center on Budget and Policy Priorities. “Even though state tax revenues are starting to rebound a little bit, the absence of the federal assistance from last year and the need to pass the [state Medicaid funding] and education assistance is huge,” Jon Shure, the deputy director of the CBPP’s state fiscal project, explains. “There’s reason to believe this year will be the worst.”

The teachers and other public-sector employees might be just the start. The CBPP has estimated that if states cut their spending from 2009 to 2010 the same level they did from 2008 to 2009, it might cost as many as 900,000 public- and private-sector jobs — swelling the ranks of the unemployed by five percent or more.

While the outlook this year is bad, it is hardly better down the road. “Usually after a recession ends it takes a couple years for state revenues to rebound,” Shure says. “If it normally takes two to three, and this recession is among the worst ever, we’re really in uncharted territory.”

Now deep in that uncharted territory, states crafting their third straight recession-era budgets have no recourse but to slash services and jobs. For schools, “the cuts are definitely going to hurt a lot more and deeper in poor urban districts,” says Elena Silva, senior policy analyst for the think tank Education Sector. “The teachers there are much more important, much more urgent for those kids. If they lose a year or three months [of educational gains], it hurts a lot more for kids in struggling schools than suburban kids. It’s a double effect: In cities, there are more teachers laid off because of budget gaps, but the kids in those cities are most vulnerable and most likely to be hurt by budget cuts.”

Facing overstuffed classrooms and reduced police patrols, the Obama administration has led a furious charge to convince Congress to help the states meet their budget needs. In a letter to the majority and minority House and Senate leaders earlier this month, President Obama wrote, “I am concerned … that the lingering economic damage left by the financial crisis we inherited has left a mounting employment crisis at the state and local level that could set back the pace of our economic recovery.” He continued: “If we allow these layoffs to go forward, it will not only mean hundreds of thousands fewer teachers in our classrooms, firefighters on call and police officers on the beat, it will also mean more costs helping these Americans look for new work, while their lost paychecks will mean less tax revenues and less demand for the products and services provided by other workers.”

But despite the efforts of individual members of Congress and the administration, the House and Senate have come up short on delivering aid to the states. On Thursday, centrist deficit hawks finally refused to vote for the jobs bill. Senate Democrats spun off the Medicaid portion of the bill, extending stimulus funding for Medicaid through the end of this year — not, as many states had anticipated, through June 2011.

Take Alabama, for instance. The state’s legislature had already adjourned for the fiscal year, its budget set with an expected $197 million in federal Medicaid money. Much of that money is now gone.

California, too, is reeling. “I support restraining federal spending, but cutting the only funding designed to help states maintain the very safety-net programs Congress mandates us to preserve will have devastating consequences,” Gov. Arnold Schwarzenegger (R-Calif.) wrote in a letter to his state’s congressional delegation in response to the funding drop.

The reduced Medicaid funding has not only meant the end of special programs, such as anti-domestic violence initiatives, daycare and mental health services. It will end up costing teachers and other public-sector workers too. States such as Pennsylvania are reacting to the Medicaid funding cut by rearranging their budgets — and sacking workers.

And other, bolder provisions to save local jobs are dead in the water. Rep. George Miller’s (D-Calif.) Local Jobs for America Act would have provided $75 billion to local governments to keep employees on the payroll. It is stuck in committee. Sen. Tom Harkin’s (D-Iowa) proposal to grant $23 billion to keep public-school teachers in their classrooms, the Keep Our Educators Working Act, one of several such edu-jobs proposals, has foundered despite support from Education Secretary Arne Duncan and the White House.

As of yet, the Senate has no plans to authorize any additional funds to help states close their budget gaps — and with teachers unions protesting and citizens starting to question the cuts, Silva, of Education Sector, sees a “huge political mess” fomenting for the fall.

“A lot of people running for office now are not going to be in really good shape,” she notes. “If you watch those districts where there have been significant teacher layoffs, unpopular layoffs, it will be interesting to see where the blame falls.”

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