Wednesday, March 10, 2010

Education Budgets as Ponzi Schemes

Today's School Boards are presiding over a sea-change in budgeting. Baby-boomer educators are retiring in large numbers and being replaced by the younger generation and boy, this is a good thing in many, many cases.

So, in attending Board meetings you'll hear that the school is "saving" money". That's hard to argue with. Saving money means that that money can REDUCE the budget - the taxpayers should see their education taxes lower.

But that's not how the system is being gamed. What happens year over year is that the so-called savings are rolled back into the coming year's budget. Fair enough. Maybe that pays for some increases. Maybe. Again, as a taxpayer one would think that that would mean that the school budget requires NO INCREASE because [simple math]:

Last Year's Budget - retiring teachers = New Budget + increased expenses = NO TOTAL BUDGET INCREASE

But that's not how the system is being gamed either.

Every year without fail what happens is:

Last Year's Budget + savings of retiring teachers + increased expenses = New budget greater than sum of all of last year's budget including "savings"

Let's put this into perspective. You give your child a five dollar bill to go buy bread thinking its cheaper than five dollars but five dollars is sufficient because maybe somebody's price-gouging.

The kid goes to the store and says, "Dad, good news! The bread's on sale for four dollars!"

Dad thinks, Great, I have enough to by a cup of coffee.

The kid gets home with the bread. "Where's the change?"

"Change? I had to borrow money to buy the bread. It costs six dollars by the time I got to the cash register. They hired a new bagger to help the cashier and the price of bread went from four dollars to six dollars."

Now Dad has no coffee today or tomorrow.

"Don't worry Dad, the bagger really needed the job."

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