What does the US financial crisis mean for education? (2) (with a distraction)
September 30, 2008 by Kristina Chew, PhD
Filed under Health
Given what’s going on in the world right now—this thing called an “economic crisis“—reporting about what one celebrity said about what another actress said about vaccines seems, well, something to remark upon and move on from, in order to read about how the financial crisis might affect credit for school districts. From Education Week today:
With investment firms such as Lehman Brothers Holdings Inc. going out of business, and others consolidating, there are fewer buyers for the bonds issued by districts to pay for such projects as new schools and major repairs, according to Susan Gaffney, the director of the federal-liaison center for the Government Finance Officers Association, in Washington.
“The market dynamic is that there are fewer players, and that could drive up the cost of borrowing in the long run,” she said.
In 2007, about $107 billion in education- related bonds was issued.
The financial crisis hit home this week for Laurens County School District 56 in Clinton, S.C., which postponed selling $28 million in bonds on the advice of the district’s financial adviser, said the superintendent, Wayne Brazell. The district planned to try again Oct. 1.
“We have been advised that there will be buyers on that day,” Mr. Brazell said in an e-mail. “We are building a new high school, and we need [the money] to finish the project.”
Education Week also notes that another shock to school budgets is likely to occur early next year year, due to home foreclosures stemming from troubled subprime mortgages.
“We’re just starting to realize what’s going on with the home foreclosures,” said John Musso, the executive director of the Association of School Business Officials International, based in Reston, Va.
Collectively, states have amassed more than $40 billion in budget deficits, in large part because of a drop in tax revenues from the slumping real estate market.
A dozen states—maybe more—have had to impose “targeted cuts on K-12 education programs.”
On the other hand, if all of this makes you get a pit in your stomach, a little a verbal vaccine catfight might be a relative …. innocuous….?…… way to distract your midnd.
There’s going to be an impact, although the feedback from my Representative’s office is that he and 20 other reps are going to submit a bill on Thursday with the additional regulation that he felt was missing on Monday’s bill.
(I hope so–even though he previously said that the public contact was overwhelmingly against Federal assistance, after yesterday’s stock market reaction, apparently the tide has turned and he is in some hot water with his constituency.)
For some reason, today esp., the pontifications of Jenny McCarthy and her fan club seem even more tangential and unimportant to me.
That’s what I’ve been feeling regard McCarthy—her message is the same, but the landscape is looking a little different.
The economic crisis is essentially an artificial one, a product or might I say an artefact of late capitalism in that it is the share values that seem to be determining a banks worth not it’s inherent solvency, never mind all the bad debts (and I guess I am one of them)
In one way I think it is very good for the planet and is probably more effective than any government resolutions for cutting the carbon footprint.
I have a certain schadenfreude for all the banks that have failed in the UK being mostly ex mutuals, I am glad that my building society is still a mutual, yah boo sucks to you…….
We are fortunate in our area not to be hit too hard by the housing bubble bursting. Homes here never really skyrocketed that much, so foreclosures and such are still pretty low…its a waiting game now.
Housing bubble burst big-time around here……
Via Pharyngula, here’s a poll where you can vote for McCarthy or Peet. As of 11.25pm EST on 30th Sept, it’s 3% to 97%.
This situation is far from artificial. While most have not realized it, the situation has deteriorated each month for the past several years. Mortgage foreclosures in the past year have exceeded the levels recorded during the great depression. Each month the unemployment numbers grow, companies have been cutting back on hiring for the past several years. We can fault banks for lending, the credit industry and so on but the politicians who act surprised by this should be impeached.
Since most of the support for schools and special programs is derived from property taxes, as these erode, so will our programs.