Throughout the United States, there is a silent epidemic sweeping the nation. Many of the states’ public teacher pension funds are facing serious shortfalls in their funding levels. While unions and the politicians – usually Democratic but with a significant fraction of Republicans as well – pander to the teachers and continue promising undeliverable benefits, the simple reality of the ineluctable math is beginning to manifest itself.
Kentucky as harbinger of many states’ futures
In the state of Kentucky, the problems of years of profligacy and kicking the can down the road are finally coming home to roost. The state’s public teachers pension fund is underfunded by somewhere between $33 and $85 billion dollars, amounts that represent far more than the state would ever be able to generate in surplus taxes.
The Laffer Curve alone tells us that while states like Kentucky may be able to slightly increase aggregate revenues through raising taxes, states like Illinois, which is facing, perhaps, an even more dire situation, have already maxed out their tax revenues, and anything more they try to squeeze out of their residents will just set off flight from the state.
But back in Kentucky, these are no longer academic questions. The reality of budgetary shortfalls due to necessary taxpayer contributions to the teachers’ pension plan is staring the state’s lawmakers straight in the face. Many analysts agree that the first and most likely place that spending cuts will be made is, ironically, to the state’s public school system. Although the state of Kentucky is not in imminent risk of having to declare bankruptcy, the lessons from the various municipal bankruptcies that have taken place throughout the recent history of the country indicate that failing governments tend to produce pathologically bad schools.
It would be ironic, indeed, if the teachers themselves ultimately end up cannibalizing the schools in which they teach. Since this is, more or less, exactly what took place in the Detroit Public Schools, it would be unfortunate but not surprising.