Election Impact – Expect Teacher Layoffs and Pension Reforms

While most of the media focus has been on the federal dynamic in the House and Senate, the real impact of yesterday’s elections on education will be the changes in the Governorships, and state legislative composition. Many governorships changed hands from Dems to Reps. Before yesterday’s election, 18 of the 37 governorships were controlled by Reps, 19 by Dems. Now 23 are Reps, 10 Dems, 1 Independent and several not yet decided. Similarly, state legislatures moved to the right including the Reps taking control of many state houses. For example, Ed Week reports that 18 state legislative chambers switched from Dems to Reps.

And, while education is not at the top of the reform agenda anywhere, this shift will have a significant impact on education policies in the years ahead. The most immediate new Governors in the Race to the Top states will need to determine how if at all they will change their state’s implementation of their RTT application. For example, Governor elect Scott has at least hinted that he is not interested in FL receiving the RTT funding because it creates ongoing state obligations with one-time federal funds. We should expect some changes to these plans, and it will be up to Arne Duncan to determine how many changes are too many, and whether he will threaten pulling the funding if the adjustments deviate too much from the original plans. Scott is also likely to sign SB 6 type of legislation in the near term. We should expect other type of education reforms in other Republican states, but only reforms that do not cost much money because there isn’t any.

Yesterday’s results will impact how states address their state budget problems. The Center on Budget and Policy Priorities estimates that at least 39 states will face a combined budget shortfall around $140 billion in next year’s state budgets. This follows the current fiscal year in which 46 states faced a combined budget shortfall of $160 billion. So regardless of who was in power, tough budgets were in the future for schools. But, states will have almost no stimulus funding or edu-job funding left over to address next year’s budget problems like they did this year’s. And, with the changes at the federal level, no additional edu-jobs or stimulus funding will be forthcoming. (Chad Aldeman suggest that at the federal level the Reps education policies might not be much different from Obama’s.  But, the one area where they do differ is in on the level of funding they will provide for education.) To make things even worse, states have made the “easy” reductions in spending to address the budget shortfalls in the last couple of years, so reductions will result in programs being eliminated instead of temporary fixes.

The change in the political dynamic will mean that more of these budget shortfalls will be addressed with budget reductions instead of additional revenues. And, since K-12 education is the biggest budget line item in almost every state, it is likely that education cuts will be coming soon. Basically because state budgets have not recovered, the jobs that the stimulus funding and edu-jobs funding spared temporarily will be lost in this next round of cuts. Some of these jobs may never be coming back as districts strive to replace labor with technology including the expanded use of virtual education. Knowing that budget reductions are coming, education policymakers should focus on teacher seniority policies to ensure that these layoffs do not come at the expense of those schools with the least experienced staff (here).

A second major dynamic that is likely to take place at the state and local level following this election is greater discussion of pension reforms. It will be difficult to address some of the pension problems at the same time that a state is facing a budget shortfall. For example, states will not likely be able to make a dent in their unfunded liabilities in the near term because they don’t have the revenues to meet these expenses. But, at a minimum, expect states to begin to create differentiated benefits for new employees that extend the retirement age, required contributions or both.

At the federal level, the Republicans will struggle with inter-party tensions between policies that challenge teacher unions, and the desire for local control which will strengthen unions. Until this tension is resolved within the party it will be difficult to figure out the type or reauthorization discussion that the new House leadership will want to engage in.