We do not need another rift between communities in our divided nation. But that is what Congress gave us with a provision in last year’s tax bill that imposed a patchwork of divisions spread across every state.

The Tax Cuts and Jobs Act created a complex new tax structure called “Opportunity Zones.” The law tasked governors with carving up their states into tax-favored O zones and tax-disfavored areas we can call NO zones. If investors and developers put a hotel in an O zone, they receive a federal capital gains tax break, but if they put the same project in a NO zone, no such luck.

Vanessa Brown Calder and I discuss Opportunity Zones in The Hill. But pictures are better than words in showing what an unfair mess Congress has created. The U.S. Treasury has posted a national map accessible here, but you get a better idea with these maps of various cities from Bloomberg.

On their way to work, members of Congress pass powerful lettering on the Supreme Court, “Equal Justice Under Law.” So why did they think it was OK to impose unequal tax rules on neighborhoods across the nation?

Since the 1960s, the federal government has made a hash of micromanaging local development through HUD and other spending bureaucracies. I fear O zones will accelerate federal meddling into local affairs on the tax side. Will the government start tying social-engineering regulations to the O zone tax rules like they have with spending aid to local governments?

Some features of federal tax law have differential effects on the states as a byproduct of the tax system’s structure. But the O zones are purposeful geographic discrimination. Aside from the unfairness, the new tax loopholes will fuel a 50-state lobbying frenzy by landowners and developers to be included in the O zones rather than the NO zones. Is it just coincidence that the founder of Quicken Loans owns lots of property in Detroit’s new O zones?

Below is the new O zone map for Washington, D.C. with the favored zones in yellow. If you own property at 5300 East Capitol St NE, federal tax law has just made you a winner. If you own property across the street at 5300 East Capitol SE, you are a loser. Local governments make lots of such winner/​loser decisions, but we don’t need the federal government compounding the problem with its powerful and corrupting tentacles.

The best parts of the Republican tax law were a step forward for equal treatment, such as the capping of state and local tax deductions. It is unfortunate that a big new loophole goes in the opposite direction. 

Vanessa has further thoughts on O zones here.

Federal tax rules inducing local corruption? Check out the LIHTC.

A few weeks ago, President Trump surpassed his 500th day in office. That’s a good vantage point to appraise his economic policies to Make American Great Again.

Over at the Library of Economics and Liberty’s Econlog, I offer my assessment. It’s not good.

This may seem surprising, given current economic conditions. But economic policy isn’t merely about the current moment, but predominantly about improving economic conditions long-term. Aside from a couple of provisions in the December 2017 tax law, President Trump has done precious little in that regard and much to harm the economy long-term, from borrow-and-spend fiscal policy, to disastrous trade and immigration policies, to disinterest in serious regulatory reform, to his refusal to face the country’s dreary long-term fiscal challenges.

From my conclusion:

MAGAnomics appears to be little more than an impulsive dislike of free trade and immigration, a hazy desire for less regulation, disinterest in (or perhaps a lack courage to face) the nation’s long-term fiscal problems, and a desire to temporarily lower taxes without making the hard choices necessary to fiscally balance those cuts and make them enduring. In other words, MAGAnomics is a slogan supporting a few weak and many harmful initiatives, not a serious collection of policies thoughtfully designed to strengthen the nation’s economic health.

Take a look and see if you agree.

Long-Term, National: Money and Employees Have Poured In

Now that we’ve looked at scads of data—on spending, staffing, salaries—what can we conclude about the state of resources in public schools?

First, we need to recognize that the period since the Great Recession has been an anomaly in nearly a century of education spending. Whether in total or on a per-pupil basis, until the Great Recession we rarely saw spending decrease, especially after 1943. In the 1919–20 school year, adjusted for inflation, we spent $13.2 billion on public elementary and secondary education. In 08–09 we spent almost $690 billion, or about 52 times as much. Of course enrollment also grew—we only spent about 23 times as much per pupil!

What was the magnitude of the retrenchment between the peak spending year of 08–09 and the recession spending trough, 12–13? Total spending fell from about $690 billion to $636 billion, or 7.8 percent. The average per-pupil expenditure dropped from $13,816 to $12,621, an 8.6 percent decrease. Those dips aren’t nothing, but they are hardly catastrophic. And as of 14–15—the most recent year with federal data—total spending was back up to nearly $668 billion, and per-pupil spending to $13,119.

Teaching staff has also increased long-term. In previous posts we went back to 69–70 for data, but could have gone back to 1955 for national-level figures. Between that year and 2008, public schools went from about 3.7 teachers for every 100 students to 6.5, or about a 76 percent increase. That dropped just slightly—to 6.3 teachers per 100 students—in 2012. 

Teaching staff grew notably over the decades, but non-teaching staff growth has been far more remarkable. Going back to 1949–50, administrative staff per pupil has more than doubled, though still with only one administrator per 325 students. Support staff has grown more than three times larger, from 1 staffer per every 81 kids to about 1 per 26 students. Principals and assistant principals have more than doubled per-pupil.

Even with massive increases in resources, we haven’t seen inflation-adjusted teacher salaries increase all that much. Since 69–70—the farthest back federal data go—salaries have only risen about 6.4 percent. Total per-pupil expenditures, in contrast, grew by around 130 percent. What gives?

All that hiring, especially of non-teachers, for one thing. We’ve hired more teachers relative to enrollment, while teachers as a share of all public schooling staff dropped from over 70 percent in 1949–50 to just below 50 percent in fall 2015. Overall, in 1949–50 there were 19.3 students per staff member of all types—teachers, administrators, guidance counselors. In 2015 there were only 7.9. That’s a lot more salaries over which to spread money. We have also seen benefits’ share of compensation grow (see below). In 00–01 benefits accounted for 17 percent of total, current per-pupil expenditures in public schools, and salaries 64 percent. In 14–15 benefits had moved up to 23 percent and salaries 57 percent.

Short-Term & In Some States: A Historically Rare Case of (Some) Cuts

The Great Recession precipitated real cuts, something seldom seen in public schooling since the early 20^th Century. But the cuts were limited, varied greatly by state, and did not occur in all areas of spending.

Between 99–00 and 14–15—the time period for which we could put together consistent, total state-level spending—outlays per-pupil nationally rose from $11,510 to $13,119, though they dropped from a peak of $13,816 in 08–09. Various services, meanwhile, saw increasing outlays not just through the whole period, but also after the recession. This is consistent with a very long-term trend: hiring more and more non-instructional staff, perhaps to deal with ever-increasing bureaucratic demands on schools, as well as assigning to schools increasing non-academic missions. The area where we saw the most significant drop in spending was capital outlays—buying land and erecting buildings.

How about specifically in the restive states? Spending cuts were not necessarily the name of the game. Arizona—which has seen huge increases in enrollment since 1969–70—increased overall spending between 99–00 and 14–15, with a big increase between 99–00 and 07–08. But that could not keep up with enrollment; on a per-pupil basis spending dropped over the period. Colorado also saw overall spending rise, but it just barely fell short of keeping per-pupil funding equal from the beginning to the end of the period. North Carolina increased overall spending slightly, but saw a decline per-pupil. Kentucky, Oklahoma, and West Virginia, in contrast, saw both overall and per-pupil spending increase.

In terms of what’s been trimmed, some buffeted states saw significant cuts in capital outlays, but that category of spending tended to be very volatile. Generally, states seemed to largely protect or even increase instructional spending, while all saw increases in spending for various types of services, a finding consistent with the increased administrative spending and staffing we have seen nationally. All except Kentucky and Oklahoma have had decreasing teacher salaries since 99–00, and every one of the hot-spot states has seen long-term stagnation in teacher salaries, which is roughly the national trend.

Conclusion

If someone tells you that public school spending has been “gutted” or “cut to the bone,” or any other body-destroying description, the first thing to note is that for many decades prior to the Great Recession we shoved so much food into the public schooling system that it would more accurately have been seen as threatened with obesity than “gutting.” Even since the recession, we haven’t typically gutted anything—significant funding has still flowed—and that includes in most embattled states. That said, at least based on salaries, teachers have seen their compensation stagnate. However, a lack of overall public schooling resources is not to blame for this. It is other things: huge increases in hiring of non-teachers, and compensation moving more toward benefits than salaries.

It has been 17 years since the federal government took over security screening at the nation’s airports, and they still haven’t figured out how to schedule more screeners during busy times.

The photo is yesterday afternoon in Denver. It took 26 minutes to get through the line. Leaving from Dulles a couple days earlier it took a ridiculous 46 minutes.

The problem is that monopoly bureaus like the Transportation Security Administration do not value Americans’ time, and they have little incentive to operate efficiently. Why did the Denver airport have just four security lines open yesterday when this facility gets 58 million passengers a year? 

The photo makes clear that the mob scene generated by the bureaucracy creates a major security problem in itself with respect to possible lunatic bombers. Dulles at 46 minutes was even more frustrating and more of a mob scene.

Both airports are vast structures that cost billions of dollars to build. Yet the government does not seem interested buying a few more machines and adding screeners. Government monopolies do not, or cannot, properly trade off costs and benefits.

The ultimate solution to this government-caused congestion problem is to privatize both airport screening and the nation’s airports, as I discuss here and here.

But a good first step would be to devolve responsibility for screening to local governments. The City of Denver, for example, would have a strong incentive to invest in screening lines because the local economy gains huge benefits from the airport. The faraway bureaucrats in Washington apparently couldn’t care less about Denver’s economy or the frustrations of local residents and visitors.

We’ve looked at the K‑12 spending trends both nationally and in restive states, broken down per-pupil expenditures into smaller bits, and added North Carolina. I had planned to finish this spending series with this post, but there are a lot of data to examine so I’m going to put off conclusions to the next—and final—post. We now look at total enrollment and inflation-adjusted expenditures, and then at how staffing and inflation-adjusted teacher salaries have moved, both nationally and for our “hot” states. (On all charts, pay close attention to the horizontal axis. Many start with wider increments of time than they end.)

National

Enrollment: We saw a drop between the 1969–70 school year and 89–90, then enrollment lagrely plateaued between 05–06 and 13–14.

Spending: Total public school revenues (standing in for spending because a longer trend is available) massively increased between 69–70 and 07–08—the Great Recession—at which point they started dropping, but as of 14–15 they had essentially returned to pre-recession levels. 

Teacher Salaries: Average salaries for public school teachers have been pretty stagnant since the late-1980s. The period we have been focusing on intensively—99–00 to 14–15—shows salaries peaking in 09–10, then failing to recover to levels at the beginning of that period.

Teacher Staffing: Public schools have been hiring teachers faster than enrollment has risen, starting at 4.5 teachers per hundred students in 1970 and hitting 6.5 in 2008. It dipped to slightly above 6.2 in 2014.

Non-Teaching Staff: Other staff have been rising relative to teachers, with teachers dropping from 51.5 percent of total staff in 2000 to 49.4 percent in 2015.

Arizona

Enrollment: Arizona saw a huge increase in average daily attendance, with numbers doubling between 69–70 and 99–00, while national numbers barely moved. Even between 99–00 and 05–06 Arizona’s enrollment increased about 19 percent while nationally it rose only about 5 percent.

Spending: State-level, inflation-adjusted total spending between 99–00 and 14–15 grew from about $8.4 billion to $9.7 billion, with a peak of $12.1 billion in 06–07.

Teacher Salaries: Teacher salaries have generally been dropping, especially since 89–90.

Teacher Staffing: Between 2000 and 2015 the number of teachers per 100 students fell from a little over 5 to a bit over 4.

Non-Teaching Staff: It’s been growing relative to teachers. In 2000 teachers were 49.3 percent of all staff. In 2015 they were just 46.5 percent.

Colorado

Enrollment: Like Arizona, Colorado saw enrollment increase at rates that exceeded those of the nation, with attendance rising 31 percent between 69–70 and 99–00. Enrollment continued to rise throughout the period.

Spending: Grew from $7.7 billion in 1999–00 to $9.6 billion in 14–15, and peaked in 07–08 at $10.3 billion.

Teacher Salaries: Salaries have fallen since 69–70 and 99–00. Since 99–00 they have dropped 15 percent.

Teacher Staffing: This has hovered pretty steadily around the 5.7 teachers per 100 students mark.

Non-Teaching Staff: We see a relative increase in non-teaching staff. In 2000 teachers comprised 50.7 percent of total staff. In 2015 it was down to 46.3 percent.

Kentucky

Enrollment: The story is very different from the two western states, with big drops in enrollment between 69–70 and 99–00. Enrollment has rebounded since 99–00, but still has not returned to 69–70 numbers.

Spending: Outlays rose appreciably between 99–00 and 14–15, and only took a small dip after peaking at almost $7.8 billion in 09–10.

Teacher Salaries: These grew steadily between 69–70 and 09–10, rising about 24 percent, but have since slipped back a bit.

Teacher Staffing: Since 2000, teachers per 100 students has stayed pretty steady at about 6.1.

Non-Teaching Staff: Again we see a relative increase in non-teachers, though not as big as in the previous two states, and starting from lower levels. Teachers made up only 44.1 percent of total staff in 2000 and 42.9 percent in 2015.

North Carolina

Enrollment: The Tar Heel State saw a slightly faster rate of growth between 69–70 and 99–00 than the nation as a whole, but not like AZ and CO. It has seen pretty steady but not steep increases since then.

Spending: The state saw big fluctuations, rising by about $2.4 billion between 99–00 and 08–09, then declining by roughly the same amount between 08–09 and 13–14.

Teacher Salaries: This has been a bit of a roller coaster, peaking in 99–00, but shedding almost 12 percent of value since.

Teacher Staffing: Pretty steady at about 6.5 teachers per 100 students.

Non-Teaching Staff: North Carolina has seemed to avoid the admin bug, with teachers as the percentage of all staff saying steady at about 52 percent.

Oklahoma

Enrollment: Since 99–00 steady growth, but only for a 9 percent total increase.

Spending: Has been on a gradual upswing, with just a small recession dip from which the state recovered after just three years.

Teacher Salaries: Spiked in 09–10, but returned to just a bit above the norm in 16–17, sitting at $45,245.

Teacher Staffing: Oklahoma has decreased the number of teachers per 100 pupils since 2000, dropping from about 6.6 in 2000 to 6.1 in 2015.

Non-Teaching Staff: While decreasing teaching staff, Oklahoma has seen appreciably increasing non-teaching employees, with teachers constituting 55 percent of total staff in 2000, but only 49.4 percent in 2015.

West Virginia

Enrollment: This state hemorrhaged enrollment between 69–70 and 07–08, falling 28 percent, and it has hovered around 271,000 since 99–00.

Spending: Spending spiked between 99–00 and 09–10, and after dropping significantly is still about $286 million above where it was to start the period.

Teacher Salaries: These peaked in 09–10, but have dipped below their 69–70 mark of $49,141.

Teacher Staffing: Teachers per 100 students dipped slightly since 2000.

Non-Teaching Staff: Administrative and support staff have been rising compared to teachers. Teachers made up 54.1 percent of total staff in 2000, but were down to 51.1 percent in 2015.

Next Time

That’s it for now. I’ll sum up what I think all these data tell us in the upcoming, final post.

North Carolina is becoming the latest hot spot in the education funding wildfire—thousands of protesting teachers are expected in Raleigh on Wednesday—so before I deliver the promised wrap up on my state spending series, I thought I’d add NC to the mix.

As you can see on the following chart, North Carolina’s total spending per-pupil, which includes both operational and capital costs, fell appreciably between the 1999–00 school year, the earliest with readily available federal data, and 14–15. It dropped from inflation-adjusted $10,397 to $8,986, a roughly 14 percent decline. Like other states already profiled, spending peaked right before the recession, but unlike hot-spot states Colorado, Oklahoma, and West Virginia, it never recovered to eventually exceed the beginning of the period. It basically kept dropping until the last year in the period.

Where have the biggest changes been? Breaking the spending down in the chart below, the state has generally kept instructional spending pretty steady, ending only 3 percent lower in 14–15 than 99–00. The big drops were in capital outlays and interest on school debt. The latter disappeared almost entirely, and the former dropped 71 percent, from $1,549 to $448. Like other hot-spot states, North Carolina saw increases in various support categories, with the biggest percentage increase in “other support,” which grew 50 percent.

So there’s your North Carolina snapshot. Coming next: Our final installment looking at some of the possible reasons for these changes.

If you thought that the congressional spending orgy would slow down after the bloated omnibus bill passed in March, you were wrong. Republicans are preparing to bring to the House floor a farm bill that will cost taxpayers at least $867 billion over 10 years.

While this is a “farm bill,” one-quarter of the spending will be for farm subsidies and three-quarters for food stamps. The latter is officially called “nutrition” spending. But since almost one-quarter of food stamp spending is for junk food, that label is as absurd as calling Social Security’s Ponzi-style accounting a “trust fund.”

The essence of the farm bill is a giant log roll. Much of the spending likely does not have majority support in Congress or among the public, so politicians mash together hand-outs to different groups in a broad farm-food omnibus. As the number of farmers has fallen over the decades, politicians have had to buy off an increasing number of special interest groups to pass the “farm bill.” The Congressional Research Service recently discussed how the farm bill logroll developed:

The economic depression and dust bowl in the 1930s prompted the first “farm bill” in 1933, with subsidies and production controls to raise farm incomes and encourage conservation. … The 1973 farm bill was the first “omnibus” farm bill; it included not only farm supports but also food stamp reauthorization to provide nutrition assistance for needy individuals. Subsequent farm bills expanded in scope, adding titles for formerly stand-alone laws such as trade, credit, and crop insurance. New conservation laws were added in the 1985 farm bill, organic agriculture in the 1990 farm bill, research programs in the 1996 farm bill, bioenergy in the 2002 farm bill, and horticulture and local food systems in the 2008 farm bill.

We’re subsidizing horticulture now? What’s next—subsidies for grocery stores, restaurants, flower shops, and landscape architecture?

Even with the wide-ranging logroll in the current House bill, supporters may have difficulty getting enough votes. Many Democrats are objecting to modest changes in the food stamp program, while some Republicans are objecting to the high spending on both farm and food subsidies. We will see what happens in coming weeks. 

Join us Friday at noon on Capitol Hill for a briefing on the farm bill featuring myself, Daren Bakst of the Heritage Foundation, and Scott Faber of the Environmental Working Group.

CBO’s cost estimate of the farm bill is here.

Logrolling is explained here.

An overview of farm subsidies is here.