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Education & Tax Justice

Paul Olson
UNL Professor Emeritus

This column takes the form of a dialogue with Jerry Hoffman. Jerry is an educational reformer, community organizer, and activist. His most recent project is the organizing of parents and taxpayers in impoverished rural communities to pressure the state legislature to address adequate state funding of public schools. Paul Olson is the regular writer of this column. The issue is our creation through educational funding of a two-tiered society, something that we as NFP, mostly suburban folk, must labor mightily to resist.

Olson: Nebraska has had a concern for economic development (as witness the Nebraska Advantage Act and LB 775). Some of the literature on development speaks of ‘intellectual resource’ development states and countries, ‘natural resource’ ones, and ‘manual labor’ ones. Since Nebraska has few natural resources aside from water and soil, we can hardly be a natural resource state such as Colorado was in its mining days or Texas in the oil boom days. What is the Nebraska policy, as you see it, for economic development? Are we fundamentally relying on our intellectual resources or our cheap labor?

Hoffman: I believe a mixture of both. Nebraska’s economic development policies target industries that fundamentally rely on cheap labor: finance, telecommunications, retail, manufacturing, food and food processing, and ethanol. Cheap labor is widespread in the rural areas and the cities. People that populate this labor pool are constantly subject to the footloose whims of meat packing plants, call centers, and manufacturing plants.

That cheap labor is manipulated by a class of intellectual capitalists: small interlocking networks of corporate management, CEOs, and boards of directors. Mostly located in central business districts of cities and the suburbs, such intellectual “resources” include financial institutions, investors, corporate global headquarters, and regional offices. The Nebraska Advantage Act and LB 775 provide this class with massive income, sales and property tax breaks in support of businesses which create predominantly low-wage jobs.

A consequence of Nebraska’s economic development policy is the concentration of wealth in the suburbs and poverty in the inner city and rural areas.

Olson: You have sometimes said that Nebraska has a three-tiered system for educating its youth. What do you mean by that?

Hoffman: The three tiers of which I have been speaking are: (1) Schools in the wealthy suburban beltway, which receive substantial state aid. (2) Schools in rural poverty areas, which receive little in state aid. (3) Schools growing due to immigrant families, which are inadequately funded.

The idea of ‘adequate’ education means one suitable to the times in which children will work, live, and raise families. That lack of state funding for every school district to deliver adequate education means unequal access to opportunities. The Brown v. Board of Education argument about separate and unequal stands today, and is relevant both to rural kids and to inner-city urban kids.

Coincidentally, this three-tiered system parallels the concentration of wealth at the hands of Nebraska’s economic development policies. Consider the following examples, one selected from each tier.

Millard, a suburb of Omaha, is the second-most affluent school district in Nebraska. Millard’s median household income is $68,000 (in 2000). Millard Public School easily exceeds new state and federal (including No Child Left Behind) education standards, without over-taxing property owners. Less than 8 percent of students are on free or reduced-price lunches. State aid is 39 percent of total receipts. Their property tax burden (the portion of personal income paid in property taxes) is 3 percent.

Loup County, with median household income of $26,000, struggles to meet state and federal standards, and relies heavily on property taxes. Three-quarters of students are on free/reduced price lunches. Yet state aid is only 26 percent of total receipts. Their property tax burden is a whopping 51 percent.

Schuyler (pop. 5300), in Colfax County, is the site of one of Cargill Meat Solutions’ largest beef packing plant, and is culturally diverse, with high poverty rates. Median household income is $36,000. Fully 85 percent of students are on free/reduced price lunches. State aid is 40 percent of total receipts. Their property tax burden is 4 percent. Inadequate funding levels result in difficult trade-off choices between the needs of the district’s English language learners and those of its non-ELL students.

While political conservatives sweep our situation under the rug, education remains a social class issue. Adequate education is abundant where wealth is concentrated: in the suburbs (intellectual resources). Inadequate education coexists with cheap labor. Members of the intellectual resource class often say “money doesn’t matter.” Well, it does matter. And it matters the most to those children living in poverty, and for whom English is not the native language. These children are mostly concentrated in inner-city neighborhoods and rural areas.

Olson: Omaha Public Schools has made claims in its lawsuit against the State of Nebraska similar to those you are making. These claims are dismissed by many of the candidates for governor and for state office. Is their position defensible? Are they arguing for racist funding of Nebraska’s public schools? What’s up?

Hoffman: Nebraska’s school finance system is constitutionally inadequate in that it bears no relationship to the actual costs of a school district responsible for providing educational opportunities for every child suitable to the times in which we live. For 16 years, the state has manipulated the spending growth rate of school districts from 0 percent, in economic recessions, to 4.5 percent, in economic growth periods. Yet, educational costs have grown as a result of new state and federal education standards, demographic changes in the student population, rising health insurance and energy costs, and general inflationary conditions of education goods and services. Consequently, the state aid formula produces inadequate state resources to support actual costs, which include educational services, materials, staffing, technology, and facilities.

School funding is the state’s constitutional responsibility. But, the state has pushed school funding disproportionately on the widely disparate and inequitable property tax system. Then the state places a cap on school property tax levies, limiting the local fiscal ability to fund schools. A funding system not based on actual costs and which relies heavily on property tax revenues results in unequal access to educational opportunities.

Nationally, many states are reforming school funding systems based on adequacy or cost-audit studies. Frequently, these reforms are a direct result of school finance adequacy lawsuits pressuring action in state legislatures. Often, that action calls for substantial state-level increases in school funding. Kansas’ state legislature, for example, had to produce an additional $290 million.

The platform of many of the candidates for governor and state office is driven by the ideology of the intellectual resource class: cut taxes and reduce the size of government. Candidates talk about being big supporters of quality public education. But, that cannot be taken seriously unless they are willing to address the fundamental inadequacies in school funding.

Olson: The people who are being treated unfairly in your analysis appear to be rural townspeople and farmers, blue collar people in Omaha, African American people, migrant Hispanic groups, and some Native American groups. Is there any movement to create a coalition of such groups? If the lawsuits fail, what will people do?

Hoffman: Grassroots organizing in and across such groups must occur now, regardless of the outcome of the lawsuits. People need to organize widely across this state to push for education funding reforms. In doing so, we must use all the tools available to pressure the legislature and the governor into action. That includes non-violent civil disobedience, protests, and demonstrations. We need to use petition and referendum initiatives, work on campaigns of political candidates, vote, and use the courts to challenge the constitutionality of laws, regulations and rules that create social injustices.

I have initiated a movement to organize parents and taxpayers, Latino and white, in the rural areas, to reform education funding. Some productive communication has occurred with organizers in Omaha. We have no effort with Native American groups, currently. It would be helpful to convene a series of meetings to form a broad-based, statewide organizing coalition.

Olson: What are the strengths of the Nebraska educational system, and how can we build on them?

Hoffman: Good small schools, located close to where children live, and with adequate funding, are the right of every child. Public schools that sit at the cultural and economic epicenter of rural places and city neighborhoods best serve the needs of children. That is the strength of Nebraska’s educational system. We can build on this system by conducting an adequacy study of what it costs, in current terms, for every school to meet the State Board of Education’s new policy known as ‘essential education.’ Then we must design a school finance system that produces that level of resources.

Olson: What are our system’s primary weaknesses?

Hoffman: Its primary weakness is the perpetuation of the current educational opportunities gap along socioeconomic class lines: cheap schools for cheap labor; ample schools for the affluent.