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What do you think will happen with regards to the department of education in the US depending on the results of the election?
For my part it seems like the left would just keep watering it down, more of the same etc. There doesn't seem to be any acknowledgment of issues over there.
I’m also not optimistic that the right will do much either though, republicans have tended to be very Ham fisted in the past with this sort of reform.
Anyone have interesting or different perspectives here?
Can someone steelman the value of the Department of Education?
What if we literally just removed it? I'm a little confused why the federal government is involved at all. And, if they are involved, then surely they deserve to be disbanded for the horrible failures in places like Chicago and Baltimore.
It depends on what you mean by "disbanding" the Department of Education. Its abolition has supposedly been a top priority of Republicans more or less from the day it was established, yet I think its nameplate budget and the implication that Federal bureaucrats are meddling in what is supposed to be a local concern create a perception of it that doesn't square with reality. So it largely means whether you're talking about a symbolic reorganization wherein the Department's functions are simply divided among other government agencies, or elimination of the actual programs the Department administers.
We can easily dismiss the first option, since it wouldn't result in any substantive changes other than the huge bill involved for administrative costs relating to the reorganization. At the very least, I'd need to see some sort of comprehensive study suggesting that the cost savings of such a reorganization would justify the cost of doing it. If we're talking about the second option, we need to look at what the Department actually does.
60% of the Department's budget is related to higher education assistance, split roughly evenly between direct loans and Pell Grants. I imagine we'd both agree that the student loan system in this country is fucked up and probably responsible for the massive cost increases schools have been experiencing for decades, but this isn't something we can just eliminate overnight. I've seen statistics that suggest Federal student loan and tuition assistance accounts for about 18% of revenue for 4-year public universities. At first glance, no institution can afford to lose 18% of revenue overnight. But it's actually more than this. The same statistics show that 28% of revenue comes from "sales and services". This theoretically includes everything from profits made from the bookstore to t-shirt sales, but the vast majority of this is revenue from university-associated hospitals. While this technically counts toward the entire institution's revenue, I'd imagine that hospital fees subsidize education about as much as tuition covers the costs of the hospital. In other words, these are functionally separate entities whose only real overlap is that the hospital is a teaching hospital for the medical school, so I'm keeping this separate. Doing that, Federal support now accounts for up to 25% of revenue. As I said earlier, I'm all in favor of forcing costs down, but a 25% across the board cut will likely result in the kind of emergency cost-cutting measures that are likely to throw the entire higher education system into crisis. Not to mention the fact that a lot of existing students will find themselves with debt from unfinished degrees they can't afford to complete. I'd prefer a system that makes eligibility for federal funding contingent on cost-control, but such a system would require more Federal oversight, not less. This, of course, doesn't even account for all the existing loans that the Department services.
Beyond that huge chunk of the budget, about 15% each goes to Title I grants and special education grants. Title I grants are grants to schools with low-income students to pay for remedial reading and math services. While this may give the impression that the funding goes to low-income school districts, pretty much every school qualifies for some level of targeted funding. Again, the result will be that these programs will be cut entirely or simply replaced by state or local funding, which may be difficult in some areas.
So now we're down to the 10% of the budget that accounts for miscellaneous items like compiling certain statistics, administrative costs, etc. I'm sure there's stuff here that can be cut, but eliminating an entire cabinet-level department in order to trim out a little fat seems like an inefficient way of doing things. Unless we're willing to make some serious changes to education funding and the student loan system in the United States, and talk of eliminating the Department of Education is nothing more than a buzzword that shows we're Serious About Doing Something, so long as that something doesn't actually do anything. If the goal is to eliminate student loans or remedial and special education funding entirely then that's the discussion we should be having, not some red-herring thing where eliminating a department will magically eliminate 200 billion dollars from the budget.
As of the end of FY 2021, American college and university endowments totaled over $927 billion, up 34% from $691 billion at the start of the fiscal year. That slightly outpaced the S&P 500's growth during the same period, which was only up 26%. Even if FY 2022 and 2023 weren't quite as bumper years, the tertiary education system in the U.S. undoubtedly has at least $1 trillion in the bank, not to mention that most of the top research universities are also state institutions, with direct support from state-level taxpayers.
There's plenty of money to go around.
Endowments aren't piggy banks that schools can raid whenever they need quick cash. They consist of donor-restricted funds that have strict guidelines on how they can be spent and invested; the purpose of the underlying donations is to fund specific things in perpetuity. If a wealthy donor gives you 5 million to fund the George V. Hamilton Professor of East Asian History (who will be making 200k/year), you can't just fire the professor and spend whatever's left in the endowment. If, for whatever reason, you wanted to end the professorship, you'd have to follow whatever procedures were specified in the original donation to end the endowment, usually under the supervision of the state attorney general. Yeah, these numbers are huge. But they're meant for funding things that are, by definition, already funded.
How true is this? At some point, rules against perpetual trusts must surely apply. And if they don't apply well.. they should.
It's unconscionable for huge chunks of the economy to be tied up by the wishes of long dead people.
It's time to tax the endowments.
The law is excruciatingly clear that perpetuity limits don't apply to charitable donations, or charitable trusts, for that matter. Technically speaking, the Rule Against Perpetuities only applies to contingent remainders and executory interests, and charitable donations have neither. Practically speaking, courts and legislators are reluctant to invoke perpetuity limits on charities as a matter of public policy. I'm on the board of a nonprofit, and large donations to the general fund are rare. You can get this money from annual fundraising events, membership fees, and small donations, but if someone is looking to drop serious cash they're going to want to know in advance what projects you have coming up that it can be used for. If your projects consist of ongoing expenses, like salaries or scholarships, you'll need to raise about 20 times the annual cost and invest it so the money is always available. The alternative is that people just don't donate because they don't want their money going into a black hole. Sometimes you can get out of it, but usually only in extraordinary circumstances, and even then you'll need court approval and have to notify the AG. There's a lot of fuckery surrounding charitable orgs as it is, and removing restrictions without good reason only encourages that kind of fuckery.
Dang. It's worse than I thought. Thanks for the color. Your posts are always very informative.
I wonder what percentage of wealth is controlled by dead hands at this point?
Of course, in reality, it's often worse than dead hands. It's very live hands with a radical agenda and no accountability. Imagine if Henry Ford could see what his foundation is up to today. These endowments simply must be taxed. I'm always blown away by how much wealth they control, and how it's controlled by a group of elites who have almost no checks and balances. (The whole OpenAI fiasco shined a light on non-profit boards that way).
There are random foundations all over the country with billion dollar endowments. For example, the Kellogg foundation in Battle Creek Michigan has $8.8 billion.
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