They Want to Jam Austerity Down Our Throats. Here’s Why They are Wrong

There are still Americans who point the finger at individual homeowners and blame the current economic crisis on the housing decisions made by these individuals. The popping of the housing bubble? Individuals who made bad decisions! The financial meltdown? Individuals! Waves of foreclosures and unemployment? Individuals!

That is why it is so important that grassroots groups in Rochester help spread the story of individuals like Leonard Spears to show how the system will methodically chew up individuals if they don’t have the resources or organized citizens behind them to push back.

In 2008 Rochester residents chanted “We didn’t create this mess! We shouldn’t have to clean it up!” as legislators, buffeted by the Wall Street meltdown, attempted to balance the budget on the backs of students and civil service workers rather than ask the 1% to pay their fair share. While we were talking to people on the street and in the lobbies of Albany we were also telling the story of what really happened to our economy.

Maybe you have read the various published accounts of Wall Street machinations or seen documentaries like The Inside Job. How we got to this point is now widely understood, but the way forward depends, to a great deal, on whether we will act on what we know to be true about root causes or whether we will stand on the sidelines hailing the Emperor’s new clothes. We are up against a powerful conservative movement pushing for austerity, spouting rhetoric about “belt tightening” and “individual responsibility,” and selectively warning about “moral hazards.”

What happened in 2007 happened in 1929 and will always happen when inequality grows and a small elite accumulate more cash than they know what to do with. Although conservatives continue to ask us to believe that elites will create jobs with the extra cash, in actuality they won’t invest in new manufacturing or any other job creation. Wall Street financial activity hasn’t had any discernible relation to actual manufacturing upgrades since the early 1970’s. Venture capital accounts for a tiny fraction of Wall Street activity. Increased inequality inexorably leads to calls (sweetened by generous campaign contributions) for more opportunities for financial speculation. The overwhelming bulk of Wall Street activity is now about side bets – pure speculation.

In the 90’s Clinton’s Wall Street backers pushed to take down the walls between commercial banks and investment banks (Glass Steagall), allowing banks on Main Street to join the Wall Street casino. Frontline’s The Warning tells the story of Brooksley Born’s lonely campaign inside the Clinton administration to regulate the newly emerging derivatives market. Ironically, she was lectured by Clinton’s other cabinet members that regulation would cause the economy to implode.

Viewers of another documentary, The Inside Job, invariably drop their jaws as the film connect the dots between a global pool of cash burning a hole in the pockets of the wealthy few, the slicing and dicing of mortgages into collateralized debt obligations, deregulated predatory lending, and extraordinarily risky credit default swaps (aka hedge insurance). This unregulated stew eventually brought the whole global financial system grinding to a halt. Standing before this house of cards economists and regulators and ratings agencies kept declaring that the game was working – until it didn’t.

The conservative machine’s response to the problem was to call for more deregulation and austerity. They have tried to convince us that the economy collapsed because people made foolish mortgage decisions and Fannie and Freddie enabled the problem. Their prescription is to double down on the policies that caused the crash – continue to dismantle financial regulation and let Wall Street move forward “unshackled.” Should we give more tax breaks to the 1% so they could “create more jobs?” Should we balance the books in state, county and city legislatures by laying off more teacher and civil service workers? They want us to believe that economic stimulation doesn’t work. Austerity and an unshackled Wall Street is the solution.

What we now know is that the Obama White House and Democratic powerbrokers did not stick by their commitment to Keynesian stimulus. To start with, the recovery act was too small by a third. Although General Motors and the banks got bailed out, President Obama refused to fire Edward DeMarco, Bush’s head of Federal Housing Finance Administration. DeMarco refuses to allow Fannie and Freddie to reduce the mortgage principal on hundreds of thousands of underwater homes. It wasn’t hard for Republicans in DC to overcome a half-hearted defense of financial regulation by Democrats who have relied more on Wall Street campaign contributions than union cash since George Meany parted ways with George McGovern over the Vietnam war. The result is that the attempted reform, the Dodd-Frank financial regulation act, has emerged from the dealmaking process toothless, revealing a governing apparatus moving toward intractable oligarchy. At the Federal Reserve, Bernanke showed creative aggressiveness in stopping the collapse of the banking system but has refused to take any strong steps to set expectations that might lower unemployment. Finally, last summer the Obama administration pivoted from a focus on stimulus to embrace conservative concerns about their favorite boogeyman – the deficit, leading to a budget deal (“sequestration”) that looks like it could plunge the American economy back into recession again.

In May, a NY Daily News headline read “Cuomo: Minimum Wage Harder to Get Than Gay Marriage.” The headline takes on broader significance when held up against poll numbers. While NY legislators and the Governor were able to muster the courage to deliver marriage equality to NYers with polls showing  just a slight margin in favor, these same elected representatives refused to take on the Chamber of Commerce and Wall Street over the minimum wage, despite massive poll numbers (78%) in favor of an increase. Our elected Democratic representatives will continue to act this way as long as they are more concerned with the feelings of campaign contributors from Wall Street and the Chamber of Commerce than the any threatened disruptive force from a massive and well organized movement.

Given the interconnectedness of our global economic system, Americans need to pay close attention to the fate of protesters in Greece and Ireland as they take on the self destructive calls for more austerity, a trend that has already threatened to plunge several nations back into recession.

We’ve seen this dynamic before. The IMF and World, in the 70’s and 80’s, undermined and destabilized the economies of emerging second and third world nations with “Structural Adjustment Policies” (SAPs). SAPs dismantled welfare systems, demanded financial deregulation and reconfigured production for export, all in the name of honoring loans from first world nations. The result was famine in the horn of Africa and genocide in Rwanda, Congo and Bosnia. This story is playing out again in Europe with the rise of nationalist and neo-nazi political parties that scapegoat immigrants. And we see that phenomenon raising its head as white Americans with low-incomes respond to racist dog whistles from the Republican campaign trail, hoping to hold onto vestiges of their race privilege.

The momentary political success of the forces of austerity in Europe is all the more remarkable given the complete bankruptcy of their analysis. They maintain that European labor market rigidity and excessively generous welfare states are the causes of the problems in Portugal, Italy, Ireland and Greece (the PIIGs). Yet all of the countries in crisis have relatively stingy welfare systems and wide inequality. At the same time however, none of the countries with generous welfare states and less inequality are in crisis. And as James Galbraith’s latest book on global inequality points out, the nations with less unemployment and minimal gaps between the rich and poor (France, Germany, the Scandinavian nations) didn’t get there by following the austerity recommendations currently being foisted on Greece and Italy. The health of their economy is not a market outcome. It is a function of public policy. They chose to avoid austerity and instead redistribute income and regulate investment and the job market. Similarly, those nations (like the cone of South America and Asia) that rejected the IMF and World Bank austerity plans are now posting the healthiest economic growth and decreased inequality.

In order to build a powerful movement to turn our economy right side up, we need to engage the struggle at all levels of government. We need to fan the sparks of the local Occupy Wall Street encampments to create momentum and power by scoring small victories, town by town and state by state. This is how social change happens – from the populist movement to civil rights to feminism – acting locally lays the foundation for thinking globally.

This is how we build the movement to change the system.


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Will Shep Step Up?

If you haven’t already seen the video of Mario Masic involved in a suspicious traffic stop and then arresting Emily Good for videotaping him here it is.

Police Chief Jim Sheppard has been attending neighborhood meetings these past few months and talking with residents. I haven’t heard from anybody who wasn’t impressed. But the Ofc Masic case will reveal Chief Sheppard’s true commitment to this community.

I’m not a legal scholar. Nor am I an expert on civil liberties. But it sure seems there isn’t any gray area here. Emily Good was 100% within her rights and Ofc Masic’s behavior reveals a disturbing lack of familiarity with basic community policing and American law. What is truly revealing is Ryan Acuff’s comment that they kept Emily in the police cruiser while a sergeant coached them on how to write up the report. Obviously they knew they had stepped over the line.

But Rochester doesn’t need the police to “manage this situation.” We need a productive relationship between police and residents. We need to know that we can count on police to help us. We need to get beyond the animosity of “no snitching” so that our neighbors and youth feel comfortable discussing illegal activity with police. We need to feel like the police are on the side of the community in improving our quality of life.

I work with several police officers who seem to get it. But the video clearly shows that the police academy is producing police who are essentially clueless and that there is a culture within the department that somehow allows Ofc Masic to believe he can do what he was caught on video doing.

Comments at the D&C website are trending overwhelmingly in favor of dismissing the officers involved. I don’t know what the lawyers are telling Chief Sheppard regarding possible lawsuits but the community clearly wants him to step up and do the right thing. That’s short term. Chief Sheppard has a much more difficult challenge – how will he address the troubled police community relations? This is a broader and more structural challenge.

Maybe he will be the police chief who finally takes it on.

UPDATE: I was just informed about court precedents allowing officers to enter gray areas if they “don’t feel safe”- hence Ofc Masic’s utilization of the term. Yet somehow it never occurred to the officer that the video would be released and we’d all see how he was abusing the concept.

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Ouch. This American Life Throws Up It’s Hands- Can’t Find Keynes Anywhere

This weekend This American Life ran a story from the Planet Money team exploding the economic development myths about job creation. Yes, the tax subsidy crew in the US is busy handing out tax breaks to their cronies who don’t actually create net new jobs, they just move them around, and yes, frequently when they actually do help start-ups that do create new jobs those jobs don’t go to High School dropouts and High School grads without other training.

BUT, there is a whole toolbox of things that government can do to address jobs – there’s a whole raft of fiscal and monetary interventions that have a serious impact on the national employment rate. Yet TAL conveniently ignored these public policy interventions. The result? The listener is left thinking that there’s nothing government can do, feeding cyncism and despair.

Good job Planet Money.

Planet Money did some podcasts on Keynes a few years ago here and here and here and a rap video here.

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Pants on Fire Department: Corwin pretends to be rags to riches

Jane Corwin’s recent ad campaign touts her small business experience and paints her as somebody that rose up through the ranks. The ad states that she “started at the bottom, delivering phone books after school… But Jane Corwin worked her way up to help lead the company.” So we’re supposed to think that she’s a scrappy rags to riches kid. Which is the opposite of working at a business that your dad owns. Which is actually what happened (Jane’s dad Wilbur D. Lewis started The Talking Phone Book in 1968).

The other thing the ad says is, “Jane Corwin was part of a team that created hundreds of jobs for Western New York.” Well, somebody help me understand economics – if she helped the Talking Phone Book take business away from the Frontier pages, isn’t that a zero sum game? One business gets more market share, another loses. No new jobs are created. They are just shifted from one company to another. Am I wrong?

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With Democrats Like This Who Needs the Tea Party

With Governor Cuomo and Bob Duffy in the midst of their sales pitch tour its a good time to assess what they are selling. It’s great to see them embracing equal marriage for same-sex couples but one has to wonder how much of that is a bone to throw to the base given their conservative ideas on property taxes.

Cuomuffy are right to focus on property taxes because in many areas of the state people on fixed incomes can’t afford to stay in their homes. For decades Albany has been whittling away the amount of tax paid by corporations and the wealthy and shifting the tax burden down to counties and municipalities who collect revenue primarily through property and sales tax.

But a tax cap is a blunt tool that ties the hands of local government. Rod Driscoll’s op ed in the Times Union shows how the property tax cap could bankrupt school districts and chase jobs away.

Most New Yorkers actually prefer the circuit breaker idea.

According to the Center for Budget and Policy Priorities property tax circuit breakers, like the devices that shut off electric power to prevent circuits from overloading, prevent property taxes from “overloading” a family’s budget by “shutting off” property taxes once they exceed a certain share of the family’s income. Circuit breakers are property tax refunds. Circuit breakers usually set a maximum percentage of income that a qualifying household is expected to pay in property taxes before it can receive a rebate. Among the states with circuit breakers currently in place, this ranges from 1 percent to 9 percent of income, with some states varying the percentage with the family’s income level. If the household’s property tax bill exceeds this limit, the state rebates either all or a portion of tax payments made above this limit.All state circuit breakers restrict eligibility to certain income groups; that is, there is a maximum income above which the household does not qualify for circuit breaker relief.

Of course this is an idea that Albany will have to wait on until they can get over protecting their wealthy patrons and get down to the business of generating some revenue for this kind of initiative.

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Yglesias should do the math on drugs sales in residential neighborhoods

Before engaging Michael Gerson’s idiotic views on drug legalization Matt writes, “but it seems to me that the costs of full heroin legalization would far exceed the benefits.”

To be fair Matt also writes “I suppose you could talk me out of this view.”

OK. Here goes.

The costs associated with the criminalization have to start by calculating the fear in neighborhoods where the drug sales thrive.

People say that they used to be able to discipline their neighbors’ kids. They say everything changed in the 80’s with crack. And what changed was that those kids that the adults used to talk to started carrying weapons BECAUSE their jobs selling drugs were illegal. So, not only are the kids murdering each other, many children aren’t playing outside and the ones that do play outside are at risk for being swallowed up by street culture and dropping out, elderly aren’t going for walks let alone opening their curtains or hanging out on porches and people have retreated, homeowners have moved, homes abandoned, empty lots spring up and housing prices have plummeted.

The young men that are caught and do prison time come back out of jail and can’t get a job because of their record and are therefor less likely to take their place as a husband in a family so the incidence of single teen moms stays high, if not rises. The social fabric of the community is frayed as the illegal activity gnaws away at trust and social institutions and spreads stress throughout the neighborhood. This stress is a major factor working against the social determinants of health. There’s currently an epidemic of diabetes and high blood pressure in neighborhoods with illegal drug activity.

Matt says that the full cost of legalization might exceed the benefits. Well, somebody should do the math because the situation is life and death in the status quo.

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How Much of This Budget Standoff Was About Race?

Is there any question which side Team Obama is on? After rescuing the banks but letting homeowners drowned in foreclosure court, after choosing to flush our tax dollars down the hole in Iraq, Afghanistan (and now Libya) rather than rescuing schools about to pink slip teachers and jam 28 kindergartners in a room, Team Obama hands a massive tax cut to the wealthiest Americans (the only folks who didn’t get their nuts squeezed over the last 30 years) and takes a chainsaw to the programs that help Americans stay afloat after the corporate system chews them up and spits them out unemployed, injured and old.

So how is this about race? Isn’t this pure class allegiance? Isn’t this mostly about Team Obama satisfying its corporate patrons?

Yes and no.

Lee Atwater captured the driving animus of the conservative movement:

“You start out in 1954 by saying, “Nigger, nigger, nigger.” By 1968 you can’t say “nigger”—that hurts you. Backfires. So you say stuff like forced busing, states’ rights and all that stuff. You’re getting so abstract now you’re talking about cutting taxes, and all these things you’re talking about are totally economic things and a by-product of them is blacks get hurt worse than whites. And subconsciously maybe that is part of it.”

The Tea Party rose to power inflamed by the notion that “those people” might benefit from “their tax dollars” under Obamacare. And they brought that energy into the House and called for massive tax cuts for rich folks and massive budget cuts for “those people.” Tea Party cadre assembled in DC last week to gleefully celebrate the looming governmental shutdown. Their moment of retribution had arrived.

Courtesy of the Center for American Progress -here is an infographic of what the budget cuts and tax cuts look like:

Of course this is really about perception. The elderly white tea party base is famous for their foam-at-the-mouth proclamations that “government should keep its hands off my Medicare.” Their racial animosity leads to the tragic result of self-inflicted foot shooting – because these white exurban and suburban senior citizens really are “those people.” The mechanism driving the misconception is the hidden nature of government. A couple of months ago Harpurs ran a hilarious article bringing together Madison Avenue types to brand US government. The problem is that Americans don’t notice what government does. They don’t have a visceral experience of how their tax dollars impact their lives. This was recently brought out by a disturbing study highlighted at the Monkey Cage. The chart shows how many Americans deny receiving federal support while at the same time receiving federal support. For instance over half the survey participants who received federally subsidized college savings programs said they didn’t receive any federal aid. The most mind blowing result was that 44% of those people receiving a Social Security check in their mailbox every month (delivered by the Federal postal system) denied they received any assistance.

Those people.









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Notes from Tactics Cttee Meeting, Sunday, April 3

Eight of us met on Sunday afternoon to fill in the tactical portion of the strategic plan.

We focused on how to get the school board to move on

  • forcing the release of the audits, a more transparent budget
  • and a budget that doesn’t balance the budget on the backs of schools
    • stop expensive Broad Institute initiatives that Brizard started without community input
    • and if there are cuts then make the cuts as far away from the classroom as possible

The challenge is how to show that the vast majority of voters support this and care deeply (litmus test).

  1. Poll: Board members seem tied to Brizard and don’t seem to feel popular discontent with the Superintendant. Our sense is that Brizard is very unpopular among parents and voters. A poll could help determine the heat of that animosity to Brizard’s plans and style. If the poll shows this then rubber stamping Brizard’s budget becomes. Lori will bring this up with CEJ. We believe we could identify funding for a poll.
  2. Postcards: We need a physical manifestation of the public sentiment. Our goal is 5000 postcards collected through liaisons, school-based activities and around town (Liberty Poll, Public Market). Jon will draft some postcards with the goals developed on Friday evening. Marie and Jon will spread to liaisons. Kelley will compile school activities calendar. The postcards can be used creatively at school board meetings.
  3. Phone bank: 21st century door knocking – we can collect phone numbers of people the school board are most concerned about (prime voters -voters who always vote and Democratic Committee members) as well as parents and set up a click-through phone bank in which the person on the line can be automatically put through to school board members to leave a message. Kelley, Dan, Dan, Henry, Phil, Marie, Jon and Lori will phone bank and recruit others. Jon will look into setting it up with Citizen Action NY. Hopefully this will be the week of April 18th.
  4. Direct presence at meetings: Turnout for
    1. Tuesday April 5 – First Public Hearing – Marie will check to see how to get an agenda item regarding the school board voting on the release of internal audits and an independent audit. We want them to vote on that. Henry will make signs to that effect. This is where we ask politely for what we want.
    2. Tuesday, April 12 – Second Public Hearing – There will be a student march to the hearing. Our degree of politeness will reflect board responsiveness.
    3. Thursday, April 14 – Finance Cttee (whole board)
    4. Thursday, April 21 – Policy and Audit Cttee
    5. Thursday, April 28 – Final Board vote

Jon and Dan will post on web and do emails. Jon and Marie will follow up with liaisons.

  1. 5. Organizational letters of support: From business associations, non-profits, business owners, neighborhood associations. Kelley will check with some neighborhood associations. This item will be revisited at the next meeting. Jon will draft a letter.
  2. Legal: We know the district is not compliant on a host of issues. Apparently this has been tried and lawyers haven’t bitten. Possible backburner.

next tactics meeting

Friday, April 8


1933 East Main Street


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City-wide Parent Meeting Notes Friday, April 1

We had about 40 people get together Friday night with strong representation from the northeast, southwest and southeast part of the city. Two people from the northwest were there.

The meeting agenda consisted of reviewing the budget process, identifying the goals, allies/opponents, decisionmakers and devising tactics to get the decisionmakers to deliver us the goals. The bulk of the meeting was taken up with identifying the goal (what is it that we want out of this budget process?) We identified the decisionmakers (schoolboard, regents and city council) and scheduled subcommittee meetings for tactics (Sunday, 2pm North Winton Village Neighborhood Safety Center, 1933 East Main Street) and there are ongoing budget analysis and media meetings.

Brainstorm – Goals: The bulk of the 19 ideas fit into 2 categories related to

  1. transparency of the budget
  2. protecting school funding
    1. changing the distribution ratio (schools versus non school funding)
    2. protecting sound basic education – small classrooms, specials (art, music, language, library, AP) and support systems
    3. stopping Brizard’s expensive initiatives that he has taken from the Broad Institute playbook without any community input

There was also some effort to capture these principles with appropriate messaging

  • No public audit no budget
  • Stop experimenting with our children’s future
  • Show us the $ – full budget disclosure
  • Don’t take $ from children
  • Our children deserve a sound basic education

There seemed to be agreement that Brizard has to go.

Other items were identified that need to be dealt with over the long haul

  • Board members should have children in school
  • Qualified substitutes
  • Elimination of benchmark tests

Several ideas for tactics were started

  • Running an alternative board slate
  • Corporate boycott campaign






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Notes from RCSD Budget Strategy Meeting, Fri. March 18

On Friday evening a bunch of parents, teachers and community members from all 4 quadrants of the city met and made some progress getting brought up to speed on the innards of the budget and the budget process. That’s the first step of a strategic planning process. Stay tuned for the next strategic planning meeting.

Dan Demarle – Report from parents who met to look at budget: Meeting again Tuesday, March 22nd, 6pm at Boulder Café on Genesee Street. RCSD says there is a $80 million budget gap.

-The district owes $300 million and pays a big debt service on that

-40% of the budget goes to schools and 60% goes to the rest

-New budget process makes every principal the CFO for the school.

-The School Board has a budget of $1.5 million – bigger budget than several schools. They have 22 staff.

-Chief of staff has a $3 million budget. What is this for?

-There is no indication from the Central Office whether any of the Central Office funds or non-school budget is being cut.

-Suburban districts are eliminating middle schools in an attempt to save money during the budget crunch – however Superintendant Brizard is opening new schools and expanding from K-6 to K-8. What is the cost of the new schools and the new grade configurations? Does it have to happen this year?

-Charter schools get less per student but that formula is changing and they will be getting more.

-It’s important to understand that although the Central Office says there’s a $80 million dollar budget deficit – but that is there version of the budget. The RTA says the budget gap is more like a $20 million.

-The RCSD has 100 more administrators than Buffalo. At an average of $100,000 that’s an extra $10 million that Rochester is paying administrators.

-Each school pays $89,000 for a Rochester City Police Officer.

-Brizard’s budget document is half as big as previous superintendant’s documents. The line items are no longer visible. It is more difficult to determine where the money is being spent.





















    Glenny Williams – report on budget process

    1. New York State provides the bulk of RCSD aid (see budget pie above). In his current budget proposal Cuomo is proposing cutting RCSD funds 1.9%. Statewide he is proposing cutting schools by $1.5 billion while proposing tax cut to people earning over a quarter million a year (Cuomo is proposing allowing the current temporary income tax surcharge to expire).
      1. The state budget is controlled by Three Men in a Room – the State Senate Majority Leader (Senator Dean Skelos, R), the Assembly Speaker (Assemblyman Silver, D) and Governor Cuomo. The Governor submits a proposed budget and then negotiates with the Senate and the Assembly.
      2. Seventy seven Assembly members (Democrats) called on the Governor and Senate to continue the millionaire’s tax/temporary income tax surcharge which would generate $5 billion in revenue to New York State (which could then be used for education). The Senate is controlled by the Republicans and they are against keeping the temporary income tax surcharge.
    2. Locally, the Superintendant submits a budget proposal to the School Board. He submits the budget at the March 29th Board meeting. The board can accept or reject the budget.
    3. Once approved the RCSD budget then goes to the Rochester City Council. The Council can then approve it, send it back or change it. The City Council usually rubber stamps the budget.

    Budget Calendar

    Tuesday, March 29th, 6:00 p.m. – Superintendent presents the proposed budget to the Board of Education.

    Tuesday, April 5th, 6:00 p.m. – Board of Education’s first Public Hearing on proposed budget.

    Thursday, April 7th, 6:00 p.m. – Board Finance Committee Meeting of the Whole, first round of budget deliberations.

    Tuesday, April 12th, 6:00 p.m.- Board of Education’s second Public Hearing on proposed budget.

    Thursday, April 14th, 6:00 p.m. – Board Finance Committee Meeting of the Whole, second round of budget deliberations.

    Thursday, April 21st – following Policy and Audit Committee Meetings which begin at 5:30 Board Finance Committee Meeting of the Whole.

    Thursday, April 28th, 6:30 p.m. – Board of Education Monthly Business Meeting and Budget Adoption.


    Colin O’Malley – Strategy Discussion

    • Questions –
      • what is the true budget gap number?
      • Is the funding formula equitable between schools?
    • Budget deficit questions lead to deficit-based conversations – we should be talking about what we want for our children
    • Report says administrators don’t have staff confidence and there was low participation among administrators
    • They are balancing the budget on the back of the students
    • The new budget formula pits ELL and Special Ed students against Gen Ed students
    • The current budget battle reflects larger national/international forces – Shock doctrine – business owners and corporate world take advantage of budget crises to push for a wish list (Brizard is a Broad Institute Fellow. Eli Broad is a billionaire education “reformer”)
    • We need to talk to parents to share this information
    • The schools aren’t as friendly. A lot has changed.
    • We need to protect funding for music and arts and electives and make sure the cuts are as far from the classroom as possible.


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