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Statement of the National Education Association: A Fair Approach to Balancing State Budgets

April 14, 2011

Submitted to the Oversight and Government Reform Committee
Hearing on “State and Municipal Debt: Tough Choices Ahead


The National Education Association, representing 3.2 million public educators working in classrooms across the country, respectfully submits this statement for the record in conjunction with Oversight and Government Reform Committee’s hearing, “State and Municipal Debt: Tough Choices Ahead.” We thank the Committee for the opportunity to provide these comments.
 
The Great Recession, our nation’s biggest financial crisis since the 1930s, is the main reason states and municipalities now face a sea of red ink. Everyone agrees that recession was born on Wall Street, not Main Street. But instead of holding the financial community accountable, middle-class public servants such as teachers are blamed for the “budget crisis.” Worse, the proposed “cure” is balancing the budget on our children’s backs—at once our nation’s most vulnerable citizens and greatest hope for the future.

Wisconsin is a case in point. Before Scott Walker became governor, there was no budget deficit in Wisconsin. On January 31, 2011, the Wisconsin Legislative Fiscal Bureau released a memo projecting a surplus of $121.4 million. The surplus evaporated when Governor Walker provided $116 million in tax breaks for corporations and another $83 million in tax breaks for multi-state corporations and investors.

Teachers and other public employees did not cause Wisconsin’s budget gap, yet they were willing to help close it. Governor Walker asked teachers to double their contribution to health care premiums and they agreed. He asked them to pay more into their pension plan and they agreed, even though the Wisconsin pension system is healthy—99.67 percent funded. A 2010 Pew Center report characterized Wisconsin as a “national leader in managing its long-term liabilities for both pension and retiree health care.”

In return, Governor Walker forced through legislation stripping public employees of their collective bargaining rights, cut nearly $1 billion from K-12 public education this year, and promised further cuts next year. Meanwhile, calls for more tax cuts for millionaires and billionaires continue unabated—at both the state and federal level. That is because balancing the budget was never the real goal. The so-called “budget crisis” is a smokescreen for stripping workers of their rights, doing away with collective bargaining, and further shrinking the middle class. In 2010, according to the U.S. Bureau of Labor Statistics, median CEO pay jumped 27 percent while worker compensation grew a paltry 2.1 percent.

This is not right, and it is not what the American people voted for in November. We need a fair approach to balancing state budgets. Middle-class Americans—whether they work in the public sector or the private sector—ARE doing their part. Year after year, they’ve been asked to pay more for health care and to secure their retirement even as take-home pay has remained virtually flat. For America’s struggling middle class, the promise that federal tax cuts would make up the difference has proved hollow. The prediction that taxes cuts for corporations and the wealthiest among us would create jobs and raise wages for the middle-class—simultaneously lowering the cost of goods and services for the average American consumer—has not panned out.

Leaders in Congress and in the states have an opportunity—and an obligation—to correct this flawed economic approach, to hear AND to protect the rights and interests of hard-working, middle-class Americans everywhere. On behalf of our nation’s 3.2 million educators, we thank the Committee for the opportunity to provide these comments.