Paris Achen:

Fears of having to make millions of dollars in budget cuts at Oregon school districts were fueled Tuesday when Gov. John Kitzhaber proposed a K-12 education allocation of $5.56 billion for the next biennium.
Local school district officials said the amount would be insufficient to support existing services at schools, and they continued to hold out hope that the Legislature would augment that number.
One-time federal stimulus funds in this biennium helped to postpone some of the cuts districts now face, and education lobbyists are urging the Legislature to backfill what’s lost in stimulus funds, so that total K-12 funding would reach $5.8 billion for the biennium.
“We were expecting this,” said Ashland schools Superintendent Juli Di Chiro. “We are hoping the Legislature will see differently. At the minimum, we need level funding.”
The Medford School District, with 12,300 students, expects cuts of $13.5 million to $14 million from its $90 million budget, under the governor’s budget proposal.

Jacob Gershman:

Mr. Cuomo’s plan, particularly his hard line on public-school spending, drew criticism from teachers’ unions and Democrats, who control the Assembly.
The budget would lower total spending on education and Medicaid to levels slightly below current-year amounts. For local governments that relied on stimulus money, the governor’s budget will feel like a bigger cut. The budget pain is especially tough for New York City schools, which would see state aid cut by hundreds of millions of dollars.
The governor’s plan would freeze higher-education spending and general aid to localities. He also seeks to squeeze $1 billion out of state agencies. Spending on public employee pensions, health insurance and other benefits would increase by $474 million, an 8% rise over the current fiscal year.
Mr. Cuomo, who has said he wants to create a lower-cost pension for new employees, did not include such plans in his budget, saving the battle for another day.

Kate Anderson Brower:

To help the U.S. compete with emerging economies such as China and India, President Barack Obama pitched Congress on a renewed focus on education in his Jan. 25 State of the Union message. “This is our generation’s Sputnik moment,” he said, invoking the U.S. response to the Soviet Union’s 1957 launch of the first satellite. That feat, at the height of the Cold War, jarred American assumptions of technological superiority.
With a divided Congress and House Republicans gunning for the Education Dept., Obama’s school reform plans may depend largely on Big Business. Administration officials say they have had more than 30 meetings and phone calls over the last year with executives about school overhaul. Penny Pritzker, who led Obama’s 2008 campaign fundraising effort and is chairman of Pritzker Realty Group in Chicago, says she’s “sure that business leaders will be asked to go to Capitol Hill to make the argument” for an improved public education system. Jeffrey R. Immelt, the General Electric (GE) chief executive officer, agrees education should be a part of his portfolio as head of Obama’s new jobs and competitiveness council, Pritzker says.

David Freddoso:

Want to save $500 billion this year? Sen. Rand Paul, R-Ky., has a way to do it.
Is it realistic? Maybe not every part of it, but have a look below and judge for yourself. I don’t think his total removal of rental subsidies is unreasonable — the fact that Section 8 is a total failure doesn’t justify dumping its beneficiaries into oblivion. But there’s also no reason every agency has to see its budget increase every year, and a lot of these cuts really do make sense. Most of them simply represent a return to 2008 levels of spending — remember that a 30 percent cut is less than it seems when an agency’s budget been increasing by 40 percent over the last few years.
Why fund NASA at traditional levels if President Obama has scaled back its mission? Why not let Indian tribes manage their own trust funds, especially considering the federal mismanagement? Why not realign our military bases abroad, sell unused federal buildings (something Obama has already begun doing), transfer some national parks to the states, and end the wasteful corporate subsidies that come out of the Departments of Energy and Commerce?

This exercise illustrates the huge changes that lie (not too far) ahead given the large deficits (and debt) we face.

Mary Williams Walsh:

Policy makers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers.
Unlike cities, the states are barred from seeking protection in federal bankruptcy court. Any effort to change that status would have to clear high constitutional hurdles because the states are considered sovereign.
But proponents say some states are so burdened that the only feasible way out may be bankruptcy, giving Illinois, for example, the opportunity to do what General Motors did with the federal government’s aid.
Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care. Some members of Congress fear that it is just a matter of time before a state seeks a bailout, say bankruptcy lawyers who have been consulted by Congressional aides.

Jessica Garrison:

When he unveiled his proposed budget earlier this week, Gov. Jerry Brown declared on the first page that it was time to push more authority to local governments, so decisions could be made “closer to the people.”
A lot of local officials see his actions very differently.
One of Brown’s proposals calls for eliminating municipal redevelopment agencies, which would take billions of dollars out of city coffers and send it instead to school districts, counties and the state. Brown projected that this would save the state $1.7 billion in the next fiscal year.

Los Angeles Times:

For the two decades that California has had a secretary of education, the position has never made much sense. Appointed by the governor, with a staff of a dozen or so people, this post has no real authority because the state Constitution places responsibility for the schools under the elected superintendent of public instruction, the job recently assumed by Tom Torlakson. The secretary’s office has accomplished little and has had more than its share of turnover. Gov. Jerry Brown was right to get rid of it; that was an easy save of almost $2 million a year.
But to be completely clear, the secretary of education wasn’t the real problem. The underlying mistake is contained in the Constitution, which mandates an elected superintendent. Ideally, Brown would be able to do away with that post and the appointed Board of Education, bring the Education Department under his wing and streamline the bulky and often-contradictory administration of the public schools.

Mark Hemingway:

Via the indispensable Labor Union Report, comes news that Chicago mayoral candidate Rahm Emanuel is bluntly telling union bosses that pensions will have to be cut:

In contrast to his main rivals in the mayor’s race, Rahm Emanuel has told labor leaders that he favors reducing pension benefits for the city’s existing work force and not just for new hires.
Although Mr. Emanuel has not yet publicly detailed his plan to confront the city’s perennial budget deficits and the severely underfinanced employee pension funds, he told union officials in a private meeting on Dec. 15 that he thought it could be necessary to cut the pensions of all employees, said people who attended the meeting.
Mr. Emanuel made the comments while he was being interviewed by leaders of the Chicago Federation of Labor. That umbrella group for 300 unions has not yet endorsed any of the candidates who will be running in the Feb. 22 election to succeed Mayor Richard M. Daley, who is retiring.
“The sticking issue for all of us is the pension issue,” said a labor activist who attended the meeting with Mr. Emanuel. “I can’t tell my members we are going to support a guy who is going to cut your pensions.”

Robert Reich:

Over the long term, the only way we’re going to raise wages, grow the economy and improve American competitiveness is by investing in our people – especially their educations.
Yet we’re falling behind. In a recent survey of 34 advanced nations by the Organization for Economic Cooperation and Development, our kids came in 25th in math, 17th in science and 14th in reading. The average 15-year-old American student can’t answer as many test questions correctly as the average 15-year-old student in Shanghai.
I’m not one of those who believe the only way to fix what’s wrong with American education is to throw more money at it. We also need to do it much better. Teacher performance has to be squarely on the table. We should experiment with vouchers whose worth is inversely related to family income. Universities have to tame their budgets for student amenities that have nothing to do with education.
But considering the increases in our population of young people and their educational needs, and the challenges posed by the new global economy, more resources are surely needed.

Sudeep Reddy:

In California, former auto worker Maria Gregg was out of work five months last year before landing a new job–at a nearly 20% pay cut.
In Massachusetts, Kevin Cronan, who lost his $150,000-a-year job as a money manager in early 2009, is now frothing cappuccinos at a Starbucks for $8.85 an hour.
In Wisconsin, Dale Szabo, a former manufacturing manager with two master’s degrees, has been searching years for a job comparable to the one he lost in 2003. He’s now a school janitor.
They are among the lucky. There are 14.5 million people on the unemployment rolls, including 6.4 million who have been jobless for more than six months.
But the decline in their fortunes points to a signature outcome of the long downturn in the labor market. Even at times of high unemployment in the past, wages have been very slow to fall; economists describe them as “sticky.” To an extent rarely seen in recessions since the Great Depression, wages for a swath of the labor force this time have taken a sharp and swift fall.

Danny Hakim:

The proposals laid out by Mr. Cuomo — including reducing the number of agencies, authorities and departments by 20 percent and capping the annual growth of state government to the rate of inflation — set up a clash with the more liberal Democrats who control the State Assembly.
In addition to freezing the salaries of most state workers, Mr. Cuomo would reduce spending on Medicaid and limit local property tax increases statewide.
“New York has no future as the tax capital of the nation,” Mr. Cuomo, a Democrat, said in his speech. “Our young people will not stay, businesses will not come, this has to change. Put it simply, the people of this state simply cannot afford to pay more taxes, period.”
The roughly 47-minute speech also offered New Yorkers a different view of their new governor: he was highly animated in his expressions of frustration over the state’s reputation and injected cornball humor, a PowerPoint slide show, and even air quotes into the formal setting.

Dennis Berman:

Land values soared. States splurged on new programs. Then it all went bust, bringing down banks and state governments with them. This wasn’t America in 2011, it was America in 1841, when a now-forgotten depression pushed eight states and a desolate territory called Florida into the unthinkable: They defaulted on debts.
This was an incredible step, even then. Fledgling U.S. states like Indiana and Illinois were still building credibility on global debt markets. They rightly feared “a prejudice so deep and wide” that they could never sell bonds in Europe again, said one banker.
Their paranoia would be familiar to the shell-shocked California and Illinois of 2011. Each is beset by budget problems so great that some have begun debating default or bankruptcy. These worriers may draw comfort from the state crises that raged and retreated long ago. Most of the states eventually paid off their debts, and changed their laws to safeguard their finances, helping make U.S. states some of the world’s best credits.

Newsweek:

The history of public debt is the very history of national power: how it has been won and how it has been lost. Dreams and impatience have always driven men in power to draw on the resources of others–be it slaves, the inhabitants of occupied lands, or their own children yet to be born–in order to carry out their schemes, to consolidate power, to grow their own fortunes. But never, outside periods of total war, has the debt of the world’s most powerful states grown so immense. Never has it so heavily threatened their political systems and standards of living. Public debt cannot keep growing without unleashing terrible catastrophes.
Anyone saying this today is accused of pessimism. The first signs of economic recovery, harbingers of a supposedly falling debt, are held up to contradict him. Yet we wouldn’t be the first to think ourselves uniquely able to escape the fate of other states felled by their debt, such as the Republic of Venice, Renaissance Genoa, or the Empire of Spain.

Patty Zarling:

Local educators say purse strings could tighten at both the state and federal levels when new Republican lawmakers take office in January.
And that has some school officials concerned about funding and revenue limits.
Mike Blecha, who sits on the Green Bay School Board and serves as its legislative liaison, noted that state rules limit school revenue increases to $200 per student, down from $275 in 2008-09. That means a school board’s ability to raise property taxes becomes limited.
Blecha said he’s heard the limit could be reduced to as little as $100 per student. Small, rural districts or districts with declining enrollment could be forced to shut down if levy limits fall that low, he said.

Wayne Washington:

Want to know how much the University of South Carolina spends to mow the grass on the Horseshoe? What about how much Clemson University doles out to clean the carpet in its board room?
If legislation expected to be prefiled in the state House of Representatives passes, the answer to those questions and many, many others will be a few mouse clicks away for South Carolinians. The legislation, which will be called The Higher Education Transparency Act of 2011 and which was backed by House Speaker Bobby Harrell at a press conference Wednesday, will require that public colleges and universities post every penny of their expenditures online.
Much of the schools’ spending is already posted on the Web, but Republican legislators have leaned on school officials to go further.

Daniel Henninger:

Sarah, Mitt and several tea party groups say the tax compromise with Barack Obama is a bad idea, sells out the GOP’s anti-spending promises and, worst of all, helps you-know-who’s re-election chances. But Newt, Mike and Tim think it’s a decent deal. Far be it from me to interrupt the GOP’s holiday spirit. Let us stipulate, however, that the furtive, ragged tax bill being let out the back door of a lame duck Congress proves–officially and conclusively–that tax policy in the United States has hit the wall.
A compelling, even frightening article in Tuesday’s Wall Street Journal about a tax system that is a morass of extenders, extrusions, loopholes, credits and bubble-gum fixes ended with the story of a grievously ill cancer patient balancing the benefits of taking an experimental drug against the estate-tax benefits to his family of an early death.