The Grim State of the States: Public Education Under Attack

Economist James Heintz is Associate Director of the Political Economy Research Institute at the University of Massachussetts, Amherst.

Heintz has written on a wide range of economic policy issues, including job creation, global labor standards, egalitarian macroeconomic strategies, and investment behavior. He has worked as an international consultant on projects in Ghana and South Africa, sponsored by the International Labor Organization and the United Nations Development Program, that focus on employment-oriented development policy.

In 2000 Heintz co-authored with The Center for Popular Economics and Nancy Folbre The Ultimate Field Guide to the U.S. Economy: A Compact and Irreverent Guide to Economic Life in America, and is also author of a variety of other books and papers on employment and economics over the past decade or so.

His current work focuses on global labor standards, employment income, and poverty; employment policies for low- and middle-income countries; and the links between macroeconomic policies and distributive outcomes.

Heintz is recently the author of a new research paper: “The Grim State of the States: The Fiscal  Crisis Facing State and Local Governments.” (.PDF), which opens with:

The collateral damage of the global financial crisis is extensive-record job losses, falling incomes, and increasing uncertainty that paralyzes workers, consumers, and investors alike. State and local governments have joined the list of casualties. They are facing the worst budget crisis in decades and the situation will likely get worse before it gets better. If not enough is done, the fiscal crunch will have far-reaching implications for the severity of the crisis and the well-being of the American people.

A sample of the current budget situation from the 50 states shows that the fiscal crisis has spread nationwide.

At the time of this writing, Arizona is projecting a $1.6 billion shortfall at the state level for the 2009 fiscal year, and this is expected to expand to $3 billion for fiscal year 2010.1 Georgia State University has recently forecast that Georgia’s revenues will drop by 6 percent in fiscal year 2009, opening up a $2.5 billion gap. Minnesota must accommodate a $426 million deficit in the current fiscal year which is projected to grow to $4.8 billion in 2010-2011.3 New York is anticipating a $1.6 billion current-year shortfall and this is expected to climb to an unprecedented $13.8 billion gap in the 2009-2010 fiscal year.

The list of states facing severe financial  problems goes on and on. According to the Center on Budget and Policy Priorities, a Washington, D.C.-based research institute, as of January 2009 at least 46 states have reported facing budget shortfalls for the current and/or the next fiscal year, totaling an estimated $99 billion.

These are just the initial estimates of the impact that the economic crisis will have on state revenues and budgets. The severity of the budget crisis ultimately depends on how long and how deep the downturn becomes and the degree of ongoing state support that the federal government ultimately provides over the next several years.

Depending on the trajectory of the crisis, the Center on Budget and Policy Priorities forecasts that the combined state-level budget shortfalls may add up to over $350 billion by 2011.

Here Heintz talks about that new paper with Paul Jay of The Real News in the first of a multi-part interview, and concludes from his research that 900,000 state workers, many in education, across the US could lose their jobs as state deficits explode: