We are joined by David I. Backer, associate professor of education policy at Seton Hall University, to discuss his new book: As Public as Possible: Radical Finance for America’s Schools (The New Press, 2025). The right-wing attack on education has cut deep. In response, millions of Americans have rallied to defend their cherished public schools. Backer’s incisive book asks whether choosing between our embattled status quo and the stingy privatized vision of the right is the only path forward. In As Public as Possible, Backer argues for going on the offensive by radically expanding the very notion of the “public” in our public schools.
Helping us to imagine a more just and equitable future, As Public as Possible proposes a specific set of financial policies aimed at providing a high-quality and truly public education for all Americans, regardless of wealth and race. He shows how we can decouple school funding from property tax revenue, evening out inequalities across districts by distributing resources according to need. He argues for direct federal grants instead of the predations of municipal debt markets. And he offers eye-opening examples spanning the past and present, from the former Yugoslavia to contemporary Philadelphia, which hastens us to envision a radically different way of financing the education of all children.
Backer’s book is thus a must-read for anyone interested in building a robust and democratic public education system today and in the future.
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Transcript
This transcript has been edited for readability.
Scott Ferguson
David Backer, welcome to Money on the Left.
David Backer
Hi there. Thanks so much for having me. I guess I’m a longtime listener, first time caller.
Scott Ferguson
We are so overjoyed to have you. So we’ve invited you onto the podcast, finally, after many years, to talk about your forthcoming exciting new book, As Public as Possible: Radical Finance for America’s Public Schools that is set to be published December 2nd. Do I have that correct?
David Backer
That’s right.
Scott Ferguson
Cool. We want to dive into this book, but per usual we’d like to invite you to introduce yourself to our listeners a little bit. Talk a little bit about your intellectual, academic background and work and what brought you to this book. I think we’d also love to hear something about your history as an activist and an organizer in educational spaces and potentially beyond. So, the floor is yours.
David Backer
Thank you. Well, thank you again for having me. Again, I’m a fan of the pod, and I’ve learned a lot from it and a lot from you, Scott, in particular over the years, so it’s great to be with you and with your listeners. About me, I started studying philosophy in undergrad. I guess I’ll start there. I was really into the philosophy of mathematics, logic, that kind of stuff. I don’t know what it was. I was a terrible math student growing up. I guess I hated math and not only that, one of the reasons I hated math was because if you weren’t good at math, you weren’t smart. I wanted to be smart. Everyone wants to be smart, right? I was made to feel like I wasn’t because I wasn’t so good at math. I hated tests. I hate practical jokes and it really felt like one big practical joke. Like, what’s the answer, you know? So, I really hated it and I hated all the emphasis that my parents put on it growing up.
Scott Ferguson
Were they big math people? Did they work in mathematical professions? My father was an accountant, by the way. Big math and incredible penmanship.
David Backer
Yeah. My grandfather was actually an accountant and my whole family’s from South Brooklyn and, I found out recently, worked in the Empire State Building in the 40s and 50s, but he was actually the nicest in terms of all this stuff. He was the most understanding of all of it somehow. My parents, I don’t know. They had sort of reformed Jewish middle class types of anxieties about having a successful son and being good at math is just such a badge of success that there was a lot of pressure. I don’t know what it was, but I got that from teachers. You get that from everywhere too.
So by the time I got to college, I took a logic class for a language requirement and the professor said I was really good at it. She ended up being my advisor and I ended up taking a course with her over and over again where she just created her own sort of graduate seminar in lieu of a graduate program in philosophy of math and logic. I also studied continental philosophy and I had a real hatred of the continental analytic divide. I really didn’t like it. I didn’t understand it. We had a little group as undergraduates and we tried to name ourselves. We were in Washington DC, so we called it the Washington Circle. We tried to really do it up, you know. We called ourselves the “New Positivists” because we were positive about all philosophy. We’d get together and have these reading groups, people would give papers on Heidegger and the empty set, or things in philosophy of law. I just really hated how some of these professors on both sides, frankly, were so dismissive of the other when I felt that there were tools on each side that were really great. After that I found I really had a flavor for teaching. I also thought philosophy was great to do with young people and so I was a part of the Philosophy for Children movement.
Scott Ferguson
You were? Get out! Oh my goodness. For years I was intrigued by that. I never joined it, but oh my goodness. We’ll have to talk in more depth about this later. But anyway, go ahead. Go ahead.
David Backer
I think it’s all relevant because I really thought these ideas were liberatory, and I felt like thinking this way could have helped me as a younger person before I got to college both personally and intellectually. We had a high school philosophy seminar where we set up relationships with schools and we had students in the philosophy department go out to the schools and lead discussions about whether or not you’re awake and stuff like that. I got really into teaching and I had a background in the youth movements and the Reformed Jewish movement and I’d gotten a taste for facilitating discussions and learning in a very horizontal way. I really like being in the classroom. My grandmothers were both teachers and so after I graduated, I became a high school teacher.
I was at a Catholic school in Washington, D. C. for two years and I really loved it. After that, I got a job in Quito, Ecuador, teaching at the American International School there. In South America I really “got” left politics. I didn’t really have a left analysis until I moved to Ecuador in 2008. I’ve been relatively lucky. Speaking of activism, I’ve been thinking about this, and maybe this would be an appropriate place to recount my own background in this way. I have been lucky world-historically. That is to say, when I went to college in Washington DC, I went in 2002. Then, in 2003, there were the marches against the war in Iraq. I moved to Ecuador after that and that was Rafael Correa’s first term. Technically it was a second term, but they passed a new constitution that gave rights to nature and everything. It was really far out. I moved there right during that vote in 2008. So, I was in Quito for a while. I taught high school there. I read Paulo Ferrari for the first time and that really opened my eyes to the space of the classroom in the wider social structure and what I was up to in this sort of neocolonial project. The longtime Ecuadorian teachers at the school getting paid half what I was getting paid as a twenty-something from the States. I was trying to make sense of all this.
I read Capital for the first time with David Harvey’s videos along with a friend of mine who was an anarchist but also working for the UN as a speechwriter. It also happened at that time in Quito, Dan Denvir and Thea Riafrancos were there. It was cool. I felt I kept wanting to read more and study more and I thought I was gonna be a high school teacher the rest of my life, but I’d been rejected from philosophy graduate programs in my previous attempts to apply to them. I just thought, “well, is there anyone that does philosophy and education? I really like teaching and I like education, but I really like philosophy. Like, can I do both?” There’s a program at Teachers College Columbia. One of maybe two or three in the country. I’ll apply and if they say yes, cool. If not, I’m just gonna teach high school in New York City and figure it out from there.
They let me in and then I started doing my doctorate from there. But in a continuation of world-historical luckiness, I moved back to New York City in 2010 and then Occupy Wall Street happened in 2011. I became very involved in Occupy Wall Street and the education working groups. I was mostly in Occupy University, but a lot of my closest friends were in the Occupy Student Debt campaign, which then became Strike Debt!, which then became the Debt Collective, which is one of the more powerful, successful kinds of movement groups we’ve seen in the last couple of decades. I was really, really into Occupy. I mean, hours and hours and hours. I never slept at the park because I had a bed in the apartment, but I was there when it got evicted but we kept going. The thing I was most active in was a thing we called the horizontal pedagogy workshop. We held it in Trump Tower, in the private public space of Trump Tower in 20011 and 2012. We met for a full year. We’d meet every Thursday for a couple hours and we came up with a set of protocols that we thought were good like learning and studying methods that were consistent with the Occupy movement. We were there in Trump Tower because we thought Trump represented everything that was wrong with the country.
Billy Saas
For a little color, where in Trump Tower? Like the lobby?
David Backer
In New York City, and this was very important to the Occupy movement, there were things called privately owned public space (POPS). Privately owned public spaces are designated by regulation that says if you’re gonna have a big building that you have to have a certain space, like an atrium or a sitting area, that the public can go and sit. I don’t know if it still is part of the building codes. I’m not as familiar with the building codes, but that was the Occupy Wall Street movement’s strategy for occupation, to use this kind of quirk of the building regulations to find these spaces and then just go and never leave. We didn’t occupy it properly because we would leave, but we would come back every week. There was an atrium at 57th and 7th Street in Trump Tower that was privately owned public space. We would just sit in there and do our thing. There were privately owned public spaces all over the city. The Occupy movement had maps where they could direct you to POPS and they encouraged people to go to those different spaces to get the embers of the occupation flowing in other places.
Scott Ferguson
Did you get harassed?
David Backer
We were never harassed. We made friends with the kind of cop or the security guard who was on beat. He thought we were just a bunch of weirdos. No one ever gave us too many problems. I mean, we were sitting there in a circle talking. It was a bunch of nerdy anarchist types. We came up with a set of protocols. There were a bunch of us from different places that were coming at this from different angles; a psychoanalytic angle, Latin American particularly, philosophy for children, a Brazilian angle from my friend, Jason Wozniak, poetry and interpretation angle. We just sort of brought our interest in teaching, studying, and learning. We kind of thought, “well, how can we do this for the movement?” We opened it up to the movement. We said, “if you want to come and study anything or whatever, just come.” We were basically doing the same thing every week. Someone chooses a text, one time the text was the atrium itself, so we just wandered around the building.
Scott Ferguson
Nice. Like Fred Jameson.
David Backer
Yeah, yeah. Our protocols were very simple. You check in, you say how you’re feeling, and then you write a question for discussion about whatever the text is. Or you examine a text, whatever the text is, then you write a question for discussion. Then we made a list of all the questions. We read the questions out and then we see what happens. We just did that over and over again for different texts and it was transformative for me. I made so many networks, it was my first organizing experience, and I had the first energies of a young person in a movement in a country that hadn’t had a big movement moment like that in a long time. And I still use those protocols today. I still teach with that kind of thinking in mind. This is a really long answer. But you said I could speak at length, right?
Scott Ferguson
No, I love it. It’s great. This is perfect.
David Backer
The next way in which I was world-historically lucky was, I got my first job after I’d defended my dissertation, which was on the ideology of discussion facilitation. I had used that horizontal pedagogy experience as one case of a series of cases. I did a sort of Marxist psychoanalytic workup on classroom discussion. I got my first gig after defending in Cleveland, Ohio. And it just so happened I was living just a few blocks away from where Tamir Rice was murdered. The Black Lives Matter movement that was emerging at that time in 2014 and 2015, Cleveland was a node of that. They actually had their national conference that next year at my university, Cleveland State University. Now, the way that Black Lives Matter worked, at least in Cleveland, is you really organize with affinity groups, and at that time you call them ally or accomplice groups. There were a bunch of interesting Catholic worker types who were there in Cleveland and I was teaching courses in social foundations of education and also doing teacher-student teacher field evaluations. I would go to the schools and I would observe someone who was learning to become a teacher as they were working with a mentor. I would be the faculty contact. I would meet with the mentor, I’d meet with the student, I’d make sure that they met all of their certification requirements, but also I got to get into these schools and see what the Cleveland schools were like and what Cleveland was like. There was one thing I wanted to mention too, there was this project where I met up with some anarchists. At that time. I was coming out of Occupy, but Occupy, by 2014, had been metastasized into different things. I found some kin who were former Bread and Puppet alums.
They had bought a house for nothing in this neighborhood of Cleveland called Buckeye. They were calling it an urban homesteading organizing project where they would go to this house, they’d work on it, but they’d connect with their neighbors. They were white, right? But this neighborhood is like an all black, working class type of place. Buckeye did not appear on city maps. It was literally a disappeared-neighborhood in the city. In my last semester at Cleveland State I was like, “oh, this would be a great thing to do with a class.” So I had a class and I made the class project mapping Buckeye and the educational reality of Buckeye. At first, I was like “everyone has to,” but then the pushback was so immense that I had made it optional. I wanted people to go to the house and meet me at the house and have just a discussion in the house and go to the neighborhood.
I was thinking of the Black Lives Matter movement while doing this because I had mostly white middle class Clevelanders training to be teachers training to be elementary school teachers. There were young white conservative type women, and I was asking them to go to this sort of township/apartheid area of their city. I literally had a mother of one of these students meet with me and say that this assignment was endangering her health as a mother. She had had brain surgery and she thought that she was so worried about this that she was gonna have a relapse. I had another parent who followed his daughter in a car behind her car when we went to this neighborhood. There were parents who were worried about their students being trafficked by the neighbors, you know just wild stuff.
Scott Ferguson
They lived in the city?
David Backer
They lived in the city. They were training to be teachers in Cleveland.
Scott Ferguson
Because you hear about this, the people who live in rural small town areas or exurbs where they’re paranoid of the city, but people who live in the city are afraid of having brain disease relapses.
David Backer
The parents live outside the city and the kids are going to Cleveland State. The kids are living in the city because they’re going to Cleveland State or maybe they’re living with their parents and commuting. It’s in and out. There’s cities and then there are cities, right? There are places in every city where you say, “well, we don’t go there.” I haven’t written about that, but I really would love to someday. I was in Cleveland for a while and then I got lucky again because in 2016, while I was in Cleveland and in the dead of winter, I was watching the presidential primaries, and I heard that Bernie Sanders was gonna run. I had read a piece about Bernie Sanders in the New York Times magazine in 2006, and I was impressed with him then. I remember the kicker to the piece was about how he was concerned with teeth. I don’t know why I remember that, but this was a senator who was concerned with teeth. I was like, “well that sounds cool.”
Kshama Sawant had run and won in Seattle, and it was feeling like a turn. In Occupy, we were not concerned with electoral politics. We were concerned with prefigurative politics. We didn’t want a truck with the state apparatus at all. We were gonna make the world we wanted and then see what happened. I always remember the story from Denver. I don’t even know if this is legend or if it actually happened, but the occupation there got a request from the mayor’s office to negotiate demands from the occupation. Apparently the occupation agreed to the negotiation but sent a dog as their lead negotiator. That was our attitude. But when Kshama Sawant won I was like, “Oh, that’s cool. Maybe we should get elected too. Like why not?” I feel like that would probably be important.”
Then Bernie Sanders started running and that was cool, and then Trump was running and that was terrifying and then by the time 2016 came around, we moved to Philadelphia for my first tenure track job. The reason why I feel kind of world-historically lucky to be in Philadelphia in 2016 was that Philadelphia had one of the biggest and most active Democratic Socialists of America chapters. It had about a hundred people, and at that time the DSA was probably about like a thousand members or something. I’m looking for a movement, looking for a place to get involved because, at this point, starting in Occupy, I really wanted my research and academic work to be with the movement, to help the movement, to be part of the movement. It wasn’t going to be about the movement and it wasn’t gonna be from the side, it was gonna be in it. I was gonna try to help if I could. I was like, “well, this seems like an interesting organization.” Cornell West is on the board and I don’t know, I guess I’m a socialist. I don’t know. But I felt like electoral stuff was cool. They were endorsing Bernie Sanders and they were out on all these strike lines. Verizon went out on a big strike that summer.
I joined and that was in the spring of 2016 and I actually went to a Brooklyn DSA meeting. We spent a summer back in New York City on our way from Cleveland to Philly and I went to a Brooklyn DSA meeting that was twenty people in a basement of a school. Now I think it’s thousands and thousands of people, right? We’ve just elected a mayor so just thinking about that experience is sort of amazing. But being in Philly and DSA, I had a period of several years of intense factional socialist work. It was oppositional factionalist work, which was unpleasant and I thought it was important, but I caused problems. There were a group of us who were causing problems and we were fighting over what we thought socialism should be and a lot of the lines of that were race class lines. Philly is just a really interesting place to be doing organizing. I did a ton of work there, that brings us up to today.
When I got to Philadelphia, I wanted to be with the movement and I got a job at Westchester University doing policy and law and education. I was like, “what policy law thing would be great to apply my framework?” At that point I was completing my second big project after the discussion project, which was a rereading of Althusser’s educational theory, which I thought had been severely misinterpreted in the tradition of critical education, and maybe more widely in cultural studies. I was like, “well, it would be fun to apply that framework to what I don’t understand. What do the movements seem to be focused on in Philadelphia?”
In Philadelphia, they were focused on the school buildings. The school buildings were toxic. There was a teacher who had been diagnosed with mesothelioma, a longtime elementary school teacher, and they attributed it to the untreated asbestos in the school building. The working educators, which at that time were a left caucus of the teachers union, had made toxic schools a campaign priority in their organizing. A lot of the demands were like, how do you get money for the school buildings? We need money for these school buildings. How do you get that money? I thought to myself, “I have no idea. I have no idea how that works and I’m a professor of education. I should understand.” So I started teaching about school finance around 2017 and studying it more closely and then I encountered the bond market for the first time.
Scott Ferguson
I’m sorry.
David Backer
Yeah, I know. It’s when you meet the reaper, right? The last thing I’ll say, and this brings us to when we met, Scott, was in Philadelphia during the pandemic shutdowns in 2020. I would say the most recent very radicalizing moment for me was understanding the possibilities of the municipal liquidity facility and reading more and more about MMT. I had been reading Naked Capitalism and Nathan Tankus since Occupy, really. They were critical of Occupy in various ways, but it was important, because that’s where I got my news. I had been reading about MMT and the blogosphere and all that, but suddenly now to have an interest in school finance, to be focused on the project of school buildings, and the school building financing tied up in this municipal bond market and then have the municipal liquidity facility burst into existence like that was quite a moment for me.
I made connections to you and Robert Hockett and Nathan and we started a campaign with our little organizing group, which at that point had actually broken off from the DSA. The campaign was to push the Philadelphia Fed president to advocate for school districts to be eligible for the municipal liquidity facility to issue low-cost long-term loans directly out of the Fed, backed by the Treasury. We had a call and he got flooded with emails and he took a meeting with us. We didn’t advance because, in 2020, Pat Toomey killed the MLF and salted the earth to some degree. That sort of brings us up to today. I started a newsletter. I’ve gathered all of these experiences in my life, education, philosophy of mathematics, Marxism and now I’m training them on school finance and trying to make it more movement oriented.
Billy Saas
Maybe we can pull back. It seems like from your own personal experience in your long term study, in this book you provide a framework or a sort of diagnosis of how financing for public schools works currently. So can you give us a picture or a sketch of the mess as it is by way of getting us into your very helpful and exciting proposals to fix it.
David Backer
I’ll just add one other thing to my answer, which is that now I moved back to New York City in 2023 and who gets elected mayor? Hey hey! So I’m very lucky.
Billy Saas
You had a rabbit’s foot in that back pocket or something.
David Backer
No, seriously, I was like, “oh, we’re moving back to New York.” I don’t know what’s gonna happen now and look at that. I mean, I’ve got to be able to do it.
Scott Ferguson
Have you ever inverted the causality? Maybe you’re the causal force. I’d like to invite you to move to my city, if possible.
Billy Saas
New Orleans, next.
David Backer
This is the justification for a book tour, I suppose. So, school finance and how it works. It’s not irrelevant to that Mamdani thing because I’ve been in touch with the campaign. I’m sort of peripheral to the campaign, I wouldn’t say that I’m working with it, but because I was involved with it early on on the ed policy side, if the DSA is running a candidate, I just get involved. If people want help with school funding, I just I’m like, “yeah sure, whatever. You want me to write something, I’ll have ideas.” I did that with Nikil Saval’s campaign too, when he was first elected in Pennsylvania. Okay, but you asked about how school finance works and what we should do about it.
Billy Saas
We’re looking for as public as possible. Currently it is not very public. Is that right?
David Backer
Well, it depends who you ask and what “public” means.
Billy Saas
I’m asking you from New Orleans, the belly of the neoliberal education beast where we have CEOs as principals and whatnot.
David Backer
That district got fully charter-ized by Paul Vallas in the wake of the terrible hurricane.
Billy Saas
Mm-hmm.
David Backer
It’s the only district that’s fully charter-ized. Philadelphia’s the next biggest with a third charter-ized, and guess who was leading Philadelphia schools, Paul Vallis, before he went to New Orleans. School finance and the image that I use in this Baffler piece, which was inspired by reading Scott’s book and teaching it over the summer, school finance is in a straitjacket. The threads of this straitjacket, the belts and the buckles and the sleeves of this thing are made of a a hard-to-comprehend-in-it’s-totality set of government regulations and revenue streams through taxation, borrowing and repayment. In between studying philosophy and mathematics, I think about infinity sometimes. Between every two numbers, there’s an infinity of numbers. It’s like between any two governments, there’s an infinity of governments. Governments, particularly socialists, who over the last ten years have been interested in electoral power, since Socialist Alternative and Kshama Sawant sort of led the way on that. These governments are essential to understand, but no one understands them in a comprehensive way. You have technocrats at every given level who will understand their little position and their little thing, but not the whole of the thing,
Scott Ferguson
And who’s criticizing it, right?
David Backer
Who’s critiquing it? If you wanted to think about it dialectically, which I do, you actually have to know where the forces are arrayed and where the pressure points are. But to do that, you have to understand the thing. Honestly, I’ve met very few people who, number one: understand it comprehensively like that from the school board seat, let’s call it. Or even the teacher union and the school board’s subcommittees, right? In the school boards you have finance committees who review budgets for school districts who will recommend cuts when austerity comes in. Who’s on that subcommittee? I’m just gonna try to zoom out. I’ll paint a portrait here, and start from there. So the subcommittee recommends a series of cuts to a school board, most likely at a meeting attended by the superintendent, who the school board picks. Now, sometimes the school district itself can levy taxes and issue bonds, but sometimes not. Sometimes the school district is just the department of local government, or of the municipal government. The budget and its borrowing and its expenditure and revenue are limited by its relationship to that government. But sometimes that government is a town, sometimes it’s a county. Sometimes there’s a consolidation. So sometimes there are consolidated school districts that are then subject to different municipal regulations. Sometimes there are regions. There are regional authorities. There are even, in Pennsylvania, intermediate units. But I just learned today at a meeting of organizers in Iowa that there are regional bodies called AEAs, educational associations that are conglomerations of school districts trying to coordinate resources, particularly for special education. We haven’t even gotten to the state level yet. All those things occur within the state government.
But in the state government you have the Department of Education and its sort of state decisions, its state constitution, its state courts, its state legislature with the state assemblymen and the state senators who all oversee this. Not to mention sometimes there are county courts and municipal courts that become very important in school finance. These state governments also have school finance programs, state grants programs, and then sometimes they have capital programs where they provide aid, sometimes they don’t. The state governments can issue bonds. Now, there are sometimes authorities that issue the bonds for school districts. Sometimes the authorities issue them for individual schools, in the case of charter schools, and sometimes there are borrowing authorities that issue bonds across state lines. There are three states in this country that issue bonds across state lines primarily for charter school and private school capital financing financing. One of them happens to be in Arizona. I was made aware of this recently and it just blew my mind. It turns out this one, I think I want to say it’s La Paz County, but maybe not. There’s a place in Arizona that has a borrowing authority where the municipality gets most of its revenue for issuing bonds for charter schools primarily in Texas, private prisons in Oklahoma and Texas, and surveillance technology. That’s how they finance their capital expenditure.
Scott Ferguson
How does it get routed there? Is it like they offer a certain kind of premium? How do they attract this?
David Backer
Low borrowing costs, and a lot of times these places, if they have technical expertise in a very specific form of public financing like for instance charter school financing, they just become known as a shop that can do that. A history of how that relationship started is definitely worth writing. There are these networks of borrowing authorities and at the state level you can have several borrowing authorities, economic development authorities. Sometimes the county has a borrowing authority. That’s how the school district finances its buildings. In New York it can happen that way a lot, but also in Pennsylvania. A lot of times states will have dormitory authorities for the higher education institutions, private and public, so you can actually get bond statements for Columbia University in New York by looking at the New York Dormitory Authority, which was actually formed in the wake of the 1975 fiscal crisis, which was basically just bonds.
Nobody wanted to buy New York City’s bonds and no government bailed them out. No bank did either. Typically, at the local level, taxes on property are the ones that are levied. As an answer to your question, is this public? Tell me if you think this is public. School districts or their municipalities will levy a tax on property within the boundaries of that district. That’s how they fund the school upwards of, I think, 45% on average, but the average hides extreme inequity in the sense that you could have an area where the suburbs are wealthy, predominantly white, where 95% is funded through property taxes because their property is so high. Now, is it public education if a student who lives, let’s say, in the south west of Philadelphia, and their mother wants to send them to a school in Upper Darby, and she does that, and then she gets arrested for it. You can’t cross that school district boundary. That’s not for everyone.
When I think of public school, I think of public school for everyone and it’s certainly not public when you divvy it up like that. There’s a phrase that school districts are fortresses. I think that’s right. This school district can’t be for everyone. There’s a phrase that was bandied about in the neoliberal period under Bush and Obama, “schools that are good independent of your zip code.” That was their justification for charter schools. But like if you were to just sort of flip that slightly and say like what would it take for every school in every zip code to be a good school? That’s public education. We don’t have a system like that and for all the reasons that I’ve talked about, the federal government only puts in about 8% funding for it. It was anemic and compromised and confused even before Trump started dismantling it. Now, who the hell knows what’s gonna happen? This past July, at the federal level, school districts around the country got an email saying, “oops, you’re not gonna get your payments from the federal government. Sorry.” They ultimately did, but it caused a lot of uncertainty.
The federal government — just to finish the sort of levels — has only really pitched in for public education in times of war and for its own military and imperial concerns. The first big federal initiative in school funding that we see is in the wake of World War I. When the US decides to get involved fashionably late to the conflict, I suppose. They find that their draft yielded a bunch of very sickly white boys from the country who didn’t know how to read. They were concerned that if they wanted to be projecting power across the world, they better have literate, healthier white men. So they decided, well, maybe we should pony up for some education at that point. The next big stage isn’t necessarily a war, although it’s a war to some degree, a proxy war against communist revolution, it is the New Deal. You have the New Deal, which is a big bastion of social democratic programs and funding and particularly in school infrastructure. Very exciting reconstruction finance creates the precedent for a lot of the creative thinking today about how we should be doing this.
As Derek Bell argued, the Brown v. Board of Education decision, which reverses the Plessy v. Ferguson ruling about segregation, the political economic context of that in 1954, a good ten years before what we saw as the civil rights eruption of the 1960s, that happens because a couple of the Supreme Court justices were on a world tour and they kept hearing the same line over and over again, which is, “why do you pose as the country of freedom in the Cold War against Soviet Russia when you treat your people so terribly in segregating particularly black students, African American students in the schools?” They felt like they were losing the Cold War on that message so they thought, “well, we better do something about this.” That’s Derek Bell’s argument. I believe him.
I think that integration happened because there was an interesting convergence between white capitalists in their fight against communism. Other times, you see the federal government being generous. You see the result of that civil rights movement in the Great Society legislation. Those projects, those educational policies that we know of as the ESEA, Elementary Secondary Education Act, have been diluted and compromised since then. The last big moment we saw was, in the wake of the most recent crises of 2008 and 2020 pandemic shutdown. The thing about education is that everyone’s so worked up about it and everyone wants to have their say, but very few people understand how the money actually flows.
The reason why certain things happen and other things don’t, I think, is because of these monetary flows. I do not think it’s public. It’s something else. People who get really excited about values like democracy and citizenship and the like will say, “well, we have to protect our public schools.” If you think about the financial values that those schools rest upon, I don’t get as excited. Not as many people are looking at school finance as a leftist, as a Marxist and from these sort of heterodox or political economic frameworks, from the perspective of racial capitalism, or private property as the problem.
Billy Saas
As a parent with a child in an elementary school in New Orleans, but I think this is representative too, one of the probably most common touch points parents and families have with school finance is being constantly solicited by their schools for donations and support. I’ve found it interesting myself, right? I show up to these, they’re good events. They’re fun. But they’re about fundraising. So schools are perpetually in fundraising mode and it reminds me a lot about what we’re talking about with the relative lack of publicity for our public school system. There’s an analog in the public media system, right?
There’s a similar act in public broadcasting act in the 60s that sort of permits folks to think and talk about things like national public radio as a meaningfully public thing when it’s really supported by charitable donations and philanthropic donations from individuals with a paucity of actual contribution from the federal government. So just to kind of notice the rhetoric of “public” when it comes to these pseudo-public institutions does a whole lot of work and — like you demonstrate in your book — takes a lot to undo and to separate and demystify.
David Backer
Yeah. I’ll just note something I thought of when you were talking was sometimes the reverse happens, which is something was more public than you thought because it was so decentralized. In the second Trump administration’s dismantling of higher education financing at the federal level, the indirect cost threshold dropped my jaw to the floor when I saw just how much money was flowing into universities from the federal government for all kinds of expenditures. I didn’t think of the university system as being as public as it actually was, but it took a wrecking ball to reveal just how powerful it was. Obviously, it could be way better and whatever, but I didn’t know that that was like that. That’s one of the reasons I wrote the book.
I started focusing on this stuff and talking about it because I feel like education is something that we all care about very deeply, and it’s an extremely important part of the terrain of political organizing. Historically and now, if you think about the ways in which the right wing is able to kind of cobble together coalitions on issues in education and the like, but without understanding how this stuff actually works. How can you have an understanding of state power? And then how can you then take state power and be effective? One of the writers who I really love about love on municipal finance named Alberta Sbragia has an image in the beginning of her book called Debt Wish from the 1980s and 90s about municipal finance and cities. Her line is like, “people who are interested in politics but don’t understand municipal finance are like doctors who are scared of blood.” I think about that a lot.
You know, particularly as Mamdani’s taking power now, but I think actually over the last fifteen years or so in the wake of Occupy, which was a wonky movement. One of the things that we read in Trump Tower was Carl Levin’s report on credit collateral debt obligations. In the wake of the 2008 financial crisis we read that report. We read the Senate report. I think that there’s a deep bench, particularly being in New York City now, there’s a deep bench of people who are on the left who now are very interested in this, or have been interested in it for a while, and have the chops to actually really change things, which maybe turns the conversation to what you asked about before in terms of the policies I talk about in the book.
Scott Ferguson
Well, I’d like to get into some of the more fine grained diagnostics that you lay out in the book. There’s the issue of how taxation is set and these mill rates and then there’s the bond market, and then you have a whole section on teacher pensions. I’d like to give some time to each. Maybe to ease our way into how this totally dysfunctional tax finance system is structured, I’d also like to defamiliarize it by asking you to talk about the kind of historical background, right? It’s my understanding from reading your book that the school districts weren’t always, in all cases, these siloed fortresses, especially as financial zones that were atomized and had to kind of sink or swim on their own because they were integrated into state level finance in a more robust way. Am I remembering correctly? How do they get from that to this system that is designed to fail around just taxation?
David Backer
You’re sort of asking a historical question. To some degree, I think historians have actually done some of the best work on school finance in terms of this larger project of what I call politicizing it, or activating school finance. They’ve done some of the best work because, in history, you can tell stories and you can tell stories about how it was otherwise. A lot of the historians of school finance have told really excellent stories that show us how things have emerged, but also how they could be different. There’s a slew of historians that I’d want to shout out. Michael Glass has a new book called Cracked Foundations that will really blow your mind about Long Island and the New Deal. But there’s Esther Cyna and Andrew Kahrl and Kelly Goodman and others doing great critical historical work in this space. Matthew Gardner Kelly wrote a book called Dividing the Public, which has partially informed my little potted history there in the second chapter where I tell this story about how the school district actually as an entity goes all the way back to colonial Massachusetts. That entity has existed to some degree in a relationship with pro private property and private property financing.
Since then, it is actually an extremely old branch of our government. But with the relationship of that entity to both the region and the state government and the federal government and then the ways in which that entity receives its financing has shifted and manifested differently in different places over time. The story that you’re referring to is that, for a long time, the property tax levied to fund public schools was a white working class victory against a previous system called the poor rates bills, which was a way of financing school for the poor schools for the poor through tuition paid for by taxes on the poor. It’s called a pauper tax. You declare yourself a pauper and then you have to pay. It’s a sort of tuition, but the state sort of centralizes the tuition monies and pays for these schools. They also relied a lot on philanthropy, churches, and the like. But you know, working classes were like, “no, we’ve got to tax property for this, the property owners should pay and everyone should be able to get schooling.” Those property taxes were levied by the state government and the state government would allot the the funding based on property taxes across the districts and that is a much more redistributive policy than what would end up happening at the turn of the 20th century, which was the districts levying that property tax within their own boundaries. So those district boundaries were not as loaded with the racial capital relations as they were before that levy.
The other part of the story that I tell is the story of home rule charters and local control and the ways in which municipalities decided to have their own constitutions. In addition to the state constitution, the federal constitution, you’ll have a local city charter, which is essentially your city constitution and how school finance is sort of wrapped up with that. The way I tell it in the book, that home rule movement, which sort of starts in the 1870s and then really booms in the early 20th century, links up with the real estate zoning movement that then also links up with the local property levy that creates the situation that we have today. Some historians recently gave me some feedback which I think is helpful to note, just that home rule was not a uniformly negative thing. There were a lot of victories, important victories, like in the case of the District of Columbia. where home rule is extremely important for having relative autonomy to be able to provide for your citizens. But I still think it’s part of that story. If you don’t have home rule charters, you don’t have the situation that we have now, which is where places that have very high property values can tax a little bit and get a lot for their kids. But if you can’t afford to live there or you don’t live there, sometimes next door you can’t go.
There are maps. There’s one called Crossing the Line from New America. New America is an association that has a great map that shows across school district boundary lines just how bad it is. That gets to the mill rate question that you were talking about before. The mill stands for millinesium, which is every thousandth. A mill rate is the number of dollars per thousand dollars of assessed value that a school district or municipality is gonna tax. You all have published great work around the tax revolts and thinking about tax revolts and actually it was from you that I learned about Josh Mound’s really important history of school bond voting that I actually feature in the book too that really just it blew my mind about about the history of neoliberalism and the role of school bonds in that.
Anyway, you have these situations where if you have high property value, you can set a very low mill rate and get a lot of money. But next door you can have very low property value and have an exponentially higher mill rate to get much less. I think of this as super regressive taxes in my mind because there’s an added element of regression there that doesn’t typically get talked about. Like it’s not just the poor who pay more. It’s not just that. It’s actually that they also get less somehow. The reason I bring all that up is because it puts some context on tax revolt. So, when really wealthy areas with high property values say we pay so much in taxes, they’re talking about that in absolute terms, not relative terms. You know who pays the taxes in relative terms are the diverse working class people. People in places like Reading, Pennsylvania, who have to pay extremely high mill rates on extremely low property value to get a drip for their students in a context of a very ungenerous state government and a historically ungenerous federal government. But again, that’s all historically, all that stuff is contingent. It all changes. We just have to figure out how.
Billy Saas
You said that school districts are sort of like fortresses, or that is sort of a catchphrase. From your study, from your close looking, from what you’re seeing, it seems like on one hand, as you note several times throughout the book, people are invested in their schools and people love, in many cases, their schools and want to see them be successful. To what extent do you understand the fortress-making of the school districts as a sort of a defense against a siege against their welfare from outside, and to what extent is it a fortress built to preserve the kind of neoliberal practices that we’re talking about? Can we think about the fortress in a couple of different ways as a metaphor?
David Backer
Yeah, that’s a great question. There’s a discourse that is obviously very old in terms of the American Revolution, but then gets taken up in a different way when the Bolshevik Revolution happened in the early 20th century. There’s a discourse of tyranny and totalitarianism that gets taken up around the issue of local control. The idea of local control is the idea that you’re kind of talking about. What are you controlling with local control? What is being controlled by local control? And who is doing that controlling? For who? It’s a very profound question. I thought of a couple things.
That local control, again, manifests differently at different moments of history. In history, I don’t mean to even just say this sort of linear time, I also mean it in this sort of more uneven way of the present. There are places where the relationship of local control to the state government to the regional government to the federal government are different and differently configured and are therefore subject to different forces or exert different forces. Also, what is being controlled and what that means to the people doing the controlling changes.
In every place the story is just a little bit different. It’s just a little bit more complicated than you’d think, given the meta-narratives that we have about the country in terms of deindustrialization, segregation, white flight, these narratives that are helpful for condensing and reducing in some ways, but in other ways when you start to look at specific districts, and specific boundary lines and how those have changed and what those communities have been and who they are, the stories don’t necessarily all match up that way.
Just as a sort of side point or method point, this is a point that Destin Jenkins makes really well in his work on the municipal bond market in that book, The Bonds of Inequality, where he says the meta-narratives of urban segregation and de-industrialization actually don’t capture the work of municipal finance and the history of municipal finance. This is a thing that’s operating in its own temporality, in its own way, manifesting in different ways at different times.
But you asked about the metaphysics of local control or the being of local control. I was gonna answer with this, because I never get to talk about this, the home voter hypothesis. I don’t know if you’ve ever heard of Fischel. This guy named Fischel has a book called The Home Voter Hypothesis, it’s cited widely in economics, in like sort of very straight-ahead economics on municipal finance, public finance type stuff. But when I read it for the first time it was sort of “Wow,” my mind was blown. He writes in a very conversational way. His home voter hypothesis is that, in any given situation where there is a local vote on something that will happen in the municipality, voters are voting as to whether or not the thing that’s being voted on increases or decreases their property value. That’s it. It doesn’t have to do with how wonderful this sewage project is, or how much you need a water treatment plant, or how much we need highways, or how much we need schools. People in the situation that we have now, the configuration that we have now, local control under the situation of local levy of property tax, state grants through sales tax, federal grants through income taxation and the like, what we have now is a situation where the home voters are going to be voting on the capitalization of their asset.
It’s a very cynical thesis, but when you start to think about it and let it sort of take root, you start to understand perhaps some of the dynamics around local control. So if you have good schools in your school district, there might be higher demand to live within your school district. If there’s higher demand to live in your school district, there’s gonna be increased property values within your school district. If there’s increased property values, then the rich people live there and if the rich people live there, there’ll be businesses to serve those people, and politicians that listen to those people. Then those people in that district want to protect what’s theirs because there’s a wall around it in the form of the school district line. What is that? Racial capitalism. That’s what that is. That’s one of the clearest names that I’ve found for it, because essentially they just want to preserve what they do and what they have, what’s theirs.
This then comes to bear on all kinds of things and it’s very difficult, although it’s not impossible to combat that redistributively through state courts, which is what the legacy of the civil rights movement has been. In the wake of 1973 court case: Rodriguez, and 1974 court case called Milligan that decided that because the word education isn’t written in the Constitution literally, then the federal government doesn’t really have any obligation to it. Ever since then there’s really been a sense that like “you get yours, I get mine. We’ll see how it all works out.” The communities that can work the system for their benefit do and sometimes that actually involves really high debt loads. You’ll see very wealthy districts with a lot of debt service obligations, because they can borrow and then they can repay it because they have high property values that they can tax.
The only other way to answer your question to some degree is to think of this investment in schools, as you put it, as having a material aspect and a spiritual aspect. The material aspect is the home voter hypothesis, which is: a lot of a lot of homeowners out there and their biggest asset is their house and so school finance is ontologically tied to the capitalization of their biggest asset. But the other horn of this ontology is the spiritual, and that is their own children and their own children’s experience and what their kids have. Not only what their kids have, but also like what kids have in general. There’s a very deep interest that people have in social reproduction, which is to maintain the continuity of what we do around here. Wherever that “here” is and whoever that “we” is, there are strong spiritual investments in the maintenance and the continuity of that. Schools articulate all these things very tightly together.
They articulate a desire to maintain the continuity of what we do with the capitalization of your biggest asset. Local control is about controlling all of that, holding on to all of that and not letting it go. I tell my students, who are largely superintendents and principals and people who want to be educational leaders, people will go to these school board meetings and they’re sounding off in the comments, and you’re thinking to yourself, “all I need to do is approve a bond so that we can fix our roof. I don’t know why these people are screaming at me.” They’re screaming at you because what you’re talking about is a threat, potentially, to the capitalization of their most valuable asset and their spiritual commitment to what they think of as being the best for their kids and kids in general in the future. That’s why I use this line in the book.
I think that this school finance is the sort of weakest link in the chain of racial capitalism in the US. When you hit this link, other things are gonna shake. When you move this piece in the Jenga board of the United States, other pieces are gonna shake. We saw that in the civil rights movement and anytime these boundaries get challenged, it’s like a third rail. It’s like a vulnerable underbelly to this whole structure and I think it’s a big shame that people don’t understand it. But also I can understand because that vulnerability would want to be protected by a sort of broad ruling class who wouldn’t want it to be different.
Scott Ferguson
So, let’s pivot to the bomb market. How does the educational wing of the bond market work and how is it structurally designed to fail?
David Backer
The municipal bond market’s like the most powerful thing people don’t know anything about. James Carvel very famously said that when he was a kid he wanted to be reincarnated as Babe Ruth or the Pope or the Dalai Lama and now that he got state power with Bill Clinton he was like “now I want to be reincarnated as the bond market because you can intimidate everyone.” The thing about this bond market is that it is unique in the world. There’s no other municipal bond. There are municipal bonds in the world, so far as I understand, and this is something I want to study more internationally, but so far as I understand there is no market like the United States municipal bond market.
According to the most recent estimates I’ve seen, twenty-seven percent of that market is devoted to education, which is the plurality. It’s higher than the category of general purpose. This bond market is devoted in its plurality to educational purposes. Now that’s higher education and Pre-K through twelve.These markets are huge markets. Municipal bond market is a four trillion dollar market. It has 1.5 million issuers which dwarfs the corporate bond market exponentially in its size. Since the Erie Canal, municipalities and state governments have financed their infrastructure through this market in some form or another and it’s been configured and reconfigured in different ways.
There’s no history of the school bond, I don’t even think there’s a history of the municipal bond in the United States, which there really should be, but there’s certainly no history of this school bond. This is a very old structure. It’s not neoliberal. It is as old as the Erie Canal and then the competition between state governments in the sort of post-revolutionary period to build themselves up infrastructurally using foreign credit. A lot of times English credit. So you know, the country fights this whole revolution and then finds itself several decades later essentially indebted to the imperial body from which it separated.
Scott Ferguson
That’s how postcoloniality rolls.
David Backer
That’s right. That’s how it rolls. The first school bond that I have found in history is in Kentucky in 1837. It’s the earliest date that I’ve found that a school district went into debt that it had to pay back with interest. But you know, the first municipal bond dates back to about 1647 outside of Utrecht, when a dike froze over and the municipality needed to go to a businessman and say, “hey, can you lend us money with interest to fix this dike,” and he was like, “yeah, sure.” It’s still paying out to this day. There’s a ceremony there on the River Lek where they roll out this bond statement from the 1640s. So this is a very old situation and philosophically I want to say that the reason why we have this situation is because of the very fundamental temporal differences in kinds of expenditure.
This is a problem that I think anyone who is interested in creative financing needs to contend with and contend with seriously. There are different kinds of expenditures. They’re typically called operating expenditures and capital expenditures. The operating expenditure is the sort of regular yearly — in the case of school districts, but for us as individuals could be monthly — charges that we just budget for. So we get income and then we have to pay our rent and we have to pay food bills and we have to pay this and that and that’s a regular thing. Then for firms and for governments, there’s salaries and benefits to pay out yearly.
But the operating expenditure that is in that regular temporal rotation is very different from the irregular needs of infrastructure and facilities of all kinds. The word that’s used sometimes in the literature is lumpy because the pattern of the need for this kind of project, if you’re thinking about a trend line, there’s a sudden bump and then it goes down, it’s lumpy, because you need a lot of money and a lot of resources up front to be able to complete this project that you might not need to do again for a hundred years in the case of a school building or you know in the case of cybersecurity infrastructure that you need to put in place like in the case of Los Angeles where they had multiple cybersecurity attacks and they had to take out bonds to be able to finance a cybersecurity system.
Or, also in the case of Los Angeles, when your state law changes and the statute of limitations on being able to seek relief and damages from sexual predators and sexual violence is extended, your school district suddenly now is on the hook for upwards of 250 claimants going back in time to be able to pay out the court cases, that’s a huge expense, right? That’s not in your operating expenditures and so in the case of the Los Angeles School District, which I just read about recently, they issued something called a judgment obligation bond or a JOB. A JOB is a bond that is a loan that is taken out to pay judgment to claimants. They had to take out this big long-term bond, but they needed short-term financing for this bond to be able to pay out to the claimants so they got a non-revolving credit agreement with the RBC, the Royal Bank of Canada, to provide short-term liquidity for a longer-term liquidity need for the sexual violence cases. I try to bring in as many cases as I can, but the capital expenditure is a temporal problem.
It’s a metaphysical problem, which is that things happen at different rhythms. The rhythm of my need for paying rent is different from the rhythm of my need to fix my HVAC system and I knew this too when I owned, quote unquote, a house, that is to say the bank owned it and I was paying the mortgage. That was a whole education too, by the way. The temporality of these needs are irreducibly different and you need to be able to have a financing arrangement that will provide the resources necessary at the right time to satisfy them.
So if you need to build more schools because everyone’s moving to your school district, like in the case in some places in North Carolina, people are flocking to these certain districts of North Carolina and Virginia too, and they have these needs because so many of their enrollments are actually increasing. They have to build more capacity. How are they going to do that? Now, the cocktail of local property tax, state sales tax, and federal income tax does not come in at the right rhythm. Those are for the operating expenditures. So, what do you do? And I know that in MMT it’s sort of a faux pas to liken this to the individual, but I’ll do it anyway because I think it fits within the context of subnational government.
If you need to buy a house, quote unquote, or if you need to go to school, you need to pay tuition, or you want to get married, or you want to get a car. These are big capital intensive expenditures that you need to engage in. So how do you do it? Well, in the United States, typically you get a loan and the loan, in this case, the credit that is extended to you, is a solution for the temporal problem of the capital expense. When you have this lumpy need and you need capital up front that is not part of your regular operating needs then you need to be able to get that liquidity from somewhere. The municipal bond market has been the country’s solution to the temporal problem of the capital expense in terms of infrastructure and school infrastructure in particular for 200 years and counting.
Though they treat this capital problem as, number one: a credit problem, you don’t have to treat it like that as you could treat it as a grant problem, right? You could just say, “oh, you need this? We’ll give it to you.” That’s one way you could solve this problem. That’s why I like talking about it this way. Not only do they treat it as a credit problem, they treat it as a private credit problem. Where they think of the state — the subnational governments — as being like private firms that need liquidity to be able to deal with their capital expenditures. A school district has its page on the Bloomberg terminal and it has its credit rating and it has its yield calculations and its deal structures and the financial consultants and the bond lawyers and all of this stuff. It’s a whole regime that is set up to be able to meet its capital expense needs, which has sort of called forth into being this regime that has held on in one way or another for so long, it’s even survived the most recent Trump budget bill. There were people who were advocating for a law that was put into place that really solidified this situation in the early 20th century, which was under the federal income tax law that exempts interest payments on municipal bonds from taxation.
So if I invest in a municipal bond and then the municipality pays me back with interest, I don’t have to get taxed on that. That is the country’s infrastructure policy. So school districts are essentially competing and they’re under a constant threat of getting their credit ratings reduced, even though ultimately debt service ends up being about eight to ten percent of their yearly budget, which by the way is a lot.The budget officials and the superintendents are nervous that any given movement, anything could threaten the credit rating on the municipal bond market, which would increase borrowing costs, increase taxes, decrease property values, decrease trust in the government and so I think the municipal bond market is, as I say in the book, this hidden force of educational injustice, because a lot of the reasons why a movement will go into a school board meeting and they’ll demand XYZ and then the superintendent and the school board members all look to the CFO or or the budget official or whoever it is and they say, “Can we do this?” He’ll say “no, the credit rating.”
That one little moment that just feels like, when you hear it, if you don’t know what it means, it feels like nothing. It feels like air or cardboard, something very ethereal, two-dimensional. Both somehow normal and incomprehensible at the same time, and you just sort of go, “okay, fine, let it go.” These are the structures that inhibit change and it’s a very deep problem. It’s a very old problem. It’s such a problem, in fact, it reminds me of that line from the usual suspects, Keyser Söze, “the thing that the devil did was convince everyone he didn’t exist.” It reminds me a bit of that. So yeah, that’s the bond market.
Scott Ferguson
Well, thank you. Obviously, from our point of view, we would want to maximize public credit facilitation in the form of granting that wherein the lumpy temporal horizon of all provisioning would be for public purposes. It would take political contestation and analysis. It wouldn’t be easily solved but we wouldn’t be dealing with this kind of straitjacket, but what you do in the book is you offer both historical and some of your own more contemporary examples of different strategies to put pressure on, or to ameliorate, or to partially overcome some of these obstacles. Maybe we can begin to talk about some of those. I know there’s been legislation, there’s been movements. Where should we start?
David Backer
Yeah. Well, I’m a big believer in — and I think this must come from my reading of Althusser — how you have to take up and take on the terrain as you find it in order to get the transformation that you want. The arrangement of forces that are in front of you are the things that you have to work with to get to where you want to get to. I think some of the policies and tactics or arrangements that I’ve proposed start from that premise. It’s not like what Aaron Benanav is doing now, which is fascinating, which is his work on the multi-criterial economy and the new left review, communist economics and all this. It’s not that. This is sort of like “here’s how it works, here’s what we could do from within this thing to take it up.” We have to take it up first and then you can take it on. It’s not as though there’s gonna be some kind of revolutionary moon landing that’s just gonna smash everything and then you get to build whatever you want afterwards. The policies I’ve come up with are in that context.
The first thing I always start with, because it still exists, are the financial disparities programs in the Twin Cities. This is a tax-based revenue sharing program that condenses the disparities between municipalities with differing revenue. It was created by a very plucky former bond salesman turned civil servant in Minnesota. He brought the idea in a briefcase to a pancake house in a meeting in 1968. The story of this program is one that I love telling, but basically what it does is it creates a regional sharing pool and a percentage of the growth in municipal tax bases from year to year — 40% — is put into a pot and then redistributed according to the changing revenues of the different municipalities, such that if you happen to have a bad year or your shopping mall closes down or your real estate, and properties go down, what you have is a pool at the regional level that will be able to compensate a little bit for it. The reason why this thing is kind of magical is it passed by like a single vote in 1971. It’s called the Minnesota Miracle and they called it Municipal Socialism and the like. But it’s decentralized collectivization at the regional level from within this system that we have and I think the more that we can talk about that kind of arrangement and try to adapt it for the different places and regions that we have in the country, the better.
Which is why, in these different political projects I’ve been involved with, I always come in as this very specialized person to talk about school finance. But in the Green New Deal for Schools legislation that Jamaal Bowman introduced during that very exciting period between 2021 and 2022 in that budget reconciliation process. I consulted on the white paper that the legislation was written around and one of my little suggestions was to create equity grants that incentivize tax-based sharing across racial and class lines, such that the federal government would be able to incentivize places that have this kind of tax-based sharing with further rewards, granting grants and loans for having that in place.
Sarah Quinn in her book, American Bonds — that’s a great book too — provides a sort of a sociological history of the bond market in the US. Her finding is, essentially, that the way that you govern federally is through credit. The way to govern in a way decentralized in federalism through credit is to essentially find ways to try to get states and municipalities to do what you want them to do by making it easier for them to borrow. I think trying to encourage places to adopt fiscal disparities legislation like that and even in new and expanded ways, like maybe increase that 40% number. Maybe also do debt sharing, you know, which they don’t do in the Twin Cities. But what if what if you could do debt sharing in addition to tax-based sharing? Because there’s still actually a big difference in those municipalities and the Twin Cities in terms of their death service obligations. Okay, so that’s one thing that I like.
Another thing that I like, which doesn’t exist anymore, but briefly did, was Vermont’s Act 60 in 1998. That policy is sort of a state level policy. Given the history, it’s sort of a throwback to the days when the state government would collect that property tax. But the state government in Vermont in the 90s didn’t collect the property tax and redistribute it. They did something even a bit smarter, dialectically. They took up and took on this system of local property taxation. Essentially, after there was a lawsuit that said the state was out of compliance with its education clause and its constitution, which is the legacy of the civil rights movement, which are still going today, these state court cases you sometimes read about, how the state is found to be out of compliance with its own constitution.
That was the civil rights strategy after they lost at the Supreme Court in the 1970s, they had to bring it to every single state. The ways in which education funding has been compensated for across disparity has largely come from the yeoman’s work of lawyers on the ground over periods of decades going with the the the slow machinations of the repressive apparatus trying to get these judges to say that the government’s out of compliance with its constitution, which then pressures the governor and the state legislature to do something about it. There’s never any guarantee that they’re gonna do something about it, but like in Pennsylvania recently, Shapiro’s answer in 2024 to the Supreme Court case victory the previous year was to say, “oh, we’ll just publicly fund private schools more with vouchers.”
In Vermont they came up with, what I think, is the best system which does the following. We talked about mill rates before, right? Now, the big problem is that some municipalities have a lot of municipal revenue and others don’t. Those municipalities that have a lot of revenue can set their mill rate really low and get a lot. Whereas the other ones can’t, the super regression, right? This policy took that up and took it on. What it said was the state is going to set a high minimum threshold for the mill rate across the board, relatively speaking. So every district has to have a high floor. You can’t just tax really low to get a lot anymore. But also for the districts that don’t have a lot, they only have to tax that level, they don’t have to go much beyond that. So for them it’s a low floor actually. But combine that high floor with a low ceiling for per pupil expenditure, which means that the state determines what the adequate per pupil expenditure is for students in your school district. So you can’t just be spending lavishly on your rich kids anymore.
Scott Ferguson
No more observatories?
David Backer
No more natatoriums and ceramic studios and the like. Actually, no, to educate your kids, you just need this and anything beyond that low ceiling goes to the state and is redistributed to the districts with the low municipal revenue. It really put the squeeze on the bourgeoisie there. Because it really puts the squeeze on the property owners with the high property values and redistributes it from within the system of taxation. It only existed for a couple years. The author, John Irving, was so upset by this system that he started his own private school for his kids because he didn’t want them to have trailer park envy, which is a quotation. I think he later felt bad about that, but every time I see John Irving I’m like “ugh.”
Howard Dean, in the next cycle’s governor’s election, came out against this system. Even though it was actually yielding tons of great results, test scores were going up, the disparities were being compensated for. In Vermont, the big problem was that you had wealthy ski towns where there were ski slopes and they had a lot of municipal revenue and then very poor farming towns that didn’t have the same property that they could get taxed. The research that I’ve read has shown that it was quite successful. But then they killed it and the conservative won the next governor’s race, basically a referendum on that policy, which the regional ruling class in Vermont came out in force against.
One of the things that they did was that they started their own network of private donations for their local public schools, such that they went door to door and they asked people to make donations to this fund. The fund would go directly into the school budget, but it was not subject to the state’s limits of Act 60. So they created their own private funding streams for their public schools in order to circumvent this policy. They’ll go to any lengths to not redistribute so that was ended but I think that model creates this kind of imagination that we can work with where I really think it took up and took on the system.
Another thing I bring up, which I think people are starting to disagree with me about, is Richard Nixon’s idea for a value added tax to fund schools. I just think that’s a cool story, but it’s also a way of thinking about how it might be different. I think maybe having a value-added tax at different levels of production rather than sales taxes, which are excise taxes, even though VATs sometimes happen at the point of sale, but I think that’s still an interesting story that gets us thinking creatively. When it comes to the bond market, there haven’t been a whole lot of alternatives that have existed in history. So we don’t have a lot to work with. I don’t talk about it in the book, but the Reconstruction Finance Corporation is definitely something to look at. Although some people argue it’s just state capitalism.
James Olson in his history of the New Deal says that was saving capitalism. That informs people down the line, like Saule Omarova and the National Investment Authority, which would have a national investment bank, but I still think that’s a good idea so I try to talk that up as a solution. The Green New Deal for Schools legislation is another great resource. It provides just tons of grants and it expands our understanding from physical infrastructure to social infrastructure. So it starts to include labor costs in the costs of having functional buildings. The National Investment Authority has essentially found a third pillar of the federal financing apparatus. There’d be the Treasury, the Federal Reserve, and then this investment authority.
From my understanding of it, the risk that’s created from the temporality of the lumpy capital needs across the spectrum of society, because there’s a risk inherent in that because you need to be able to front the capital to be able to pay for that but where’s that capital gonna come from and is it going to be able to be paid back? The more you pool that risk, the better. The National Investment Authority pools it at the federal level. Anytime you need a project, they’re going to deal with the financing, the borrowing, and the lending, and then there’ll be better technical service, pay as you go grants, low-cost grants, long-term grants that finance this stuff. My little contribution to this that I go around talking about a lot involves pensions. The whole last book, the last part of my book, is about pensions because I also think there’s a lot of stuff about school finance that’s taken up by pensions.
Pensions are huge pools of capital and they serve a very important purpose of meeting the social risk of aging. There’s traditions that think about the pensions that actually have the pensions as the huge public pools of capital for the public’s infrastructure. There’s a story from Singapore where the pensions got involved in the mortgage business to be able to increase birth rates in the country. The pension is now underwriting mortgages and what did the pension decide to do? It started to host singles dating nights so that people could meet each other, have babies, and then buy houses and take out mortgages from the pension. The pension is a great big pool of the public’s money that’s meant to meet the risk of aging and death, which is essentially our encounter with death, writ finance. We can use our resources that we’ve built up to meet death, to fund our life.
The sort of policy that I like to recommend it comes from something called fiscal mutualism, which is, in the case of schools, and I think it can be in the case of housing or water or other things it could be used similarly, but in the case of schools, the historians Mike Glass — who I talked about before — and Sean Vanatta — whose work on pensions is very good — they found that the teacher’s pension in New York was historically 10% invested in New York school bonds. They named this approach to pension investment, fiscal mutualism, which is the usage of the public’s money for the public’s infrastructure. If you position the pensions in a stronger way against the more traditional underwriters in the bond market, who are the underwriters? Who are the ones that confront that capital immediately? The big private banks and the big investment banks. They’re the ones that have all that capital and they’re the go-betweens between the bondholders and the municipalities and the borrowers.
If you can challenge and take up and take on those underwriters by exerting the force of the pension and trying to have a sort of more just usage of the public’s money, you can actually do that at the subnational level without relying on the federal government at all. Which is why I sort of talk about it more and more because of the fascism that we have. Like in the case of New York City, I’ve been pitching around the idea that the teacher’s retirement system could be an underwriter along with the green banks, de-risking school bonds that would fund green school infrastructure. I call that green fiscal mutualism, where the green bank becomes a dialectically very exciting institution.
I think a lot of people on the left hear me talk about this stuff and they’re like, “what? Like that’s still capitalism.” I’m like, “well, I mean everything’s dialectical.” What the Green Bank does in my understanding is it’s a reverse charter school. So whereas the charter school is taking public money and putting it in the private sphere for the private provisioning of a public good, the Green Bank is actually wielding private money for the public good and funneling money from the private into the public for the public. I think if you could have green banks de-risking pension purchases, school bonds, then you’d be meeting this climate issue because school buildings emit a ton of carbon but school buildings have also been totally underfunded historically and they’re not safe and they’re not healthy.
So these are some of the policies I like, some of the things some of the things Dave likes. The other last thing I’ll mention, which I haven’t mentioned in other places, but I hope people pick up on it in the book, is what the school district of Tredyffrin/Easttown, Pennsylvania did in the early 20th century. You had two municipalities: one predominantly white and the other predominantly black. They entered into a jointure to build an integrated high school in 1912. It survived multiple attempts at segregation but these communities got together across race and class lines and said, “we’re going to invest in one another. We’re going to take on this risk together through the jointure and we’re going to build this high school and we’re gonna take on this bond.” It’s a debt that they took on, but they took it on together across these very potent lines of the fortresses. When I tell people like, “well, what if you got what if you got people together across the school district lines in your region and said, let’s do jointures all together to finance each other’s infrastructure?” That would cause riots, right? The wealthy people don’t want to be financing the infrastructure for the non wealthy people that are even their neighbors. They might even be the same sports team fans. In the jointure, I think there’s a lot of possibility.
Billy Saas
Yeah, so this book’s coming out December 2nd, one day after the podcast. So listeners, go grab a copy. But there’s obviously a lot going on. I imagine some of this was on the horizon as you were putting finishing touches on it and in the introduction you addressed the second Trump term. Also we have what you mentioned as the fortuitousness of your move to New York and, of course, you got Zoran Mamdani elected by moving there.
David Backer
I hate how my retelling of it lends itself to that.
Billy Saas
No, no, I think it’s awesome. It’s good storytelling. We like a little magical realism now and then. Obviously, it wasn’t just the Mandoni campaign. There were a series of wins across the Democratic Party and some are calling it-
David Backer
Katie Wilson in Seattle too.
Billy Saas
Right, right. Some are more exciting than others. Katie Wilson, Mamdani and then, you know, some former CIA people as well. Some are calling it a blue wave and we’ve heard it said that education — and I guess we should shout out Jennifer Berkshire’s post.
David Backer
Which everyone should read. Her substack is called “The Education Wars.” She wrote another book with Jack Schneider called The Wolf at the Schoolhouse Store. She’s great.
Billy Saas
Absolutely. Yeah, so a blog post recently or a substack post basically crediting education with this recent blue wave win. We wanted to just close out by letting you offer your two cents on that.
David Backer
Yeah. Well, I tend to agree with Jennifer. What Jennifer’s picking up on is the fact that this rush on the right to dismantle the public school system as I’ve described it is a threat to the local control that I described. These districts, and particularly in the wealthy areas, predominantly white areas, but not all white, but predominantly, have done generations of work to fortify their worlds, their schools. The fortresses are activated. The fortresses are there. The Trump administration and the voucher movement are coming for those fortress walls. They’re coming for the charter schools. People in these rural areas where there are no private schools want their public schools. They don’t want them to go away and these governments, in their rush to appease the leader, are dismantling the systems that their own constituencies hold very dear. I think she’s picking up on that.
She has an ear to the ground across the country. I would just say that, if there was anything I was gonna add to that, we’re in a time of great uncertainty. It’s what Adam Tooze calls the polycrisis. While I don’t entirely agree with his conception of it, I do think that his remarks in a lecture last year are helpful, in that, all previous theorizations and concepts come from times of lower parts per million carbon in the atmosphere. Even the very idea that the new is struggling to be born while the old is dying, that idea is too optimistic for what we’re undergoing right now. You know, the time is greatly uncertain. It is very unstable. There are dislocations happening everywhere. I feel like this system that we’ve been talking about is some version of an ancien regime, thinking about the history of revolutions, like Mike Duncan’s podcast.
We’re getting to that point where this thing is shaking and it’s definitely falling apart. What that presents is a danger and an opportunity. There’s also these other forces that we have to account for in that instability, in terms of inflation, supply shock, pandemic shock, artificial intelligence. These are exciting times. “May you live in exciting times.” The thing is, we have to get together, we have to understand the terrain, and we have to figure out what policies we want when our turn comes to try to steer the chaotic ship through the chaotic sea. I think it’s not just that education will sort of underwrite a blue wave, but actually the waves themselves are very chaotic and the old color schemes are all over the place.
Zoran getting elected, and Katie Wilson and all these people doing things that you could never have imagined are all on the bingo card. The things that are not on your bingo card are on the bingo card. It’s all the more important to study this stuff very carefully to figure out what we can do to transform the structure and take advantage of the moment.
Scott Ferguson
Well, Dave Backer, thanks so much for joining us. Everybody go out and get the book As Public as Possible:Radical Finance for America’s Public Schools.
* Thank you to Zachary Nosbisch for the episode graphic, Nahneen Kula for the theme tune, and Thomas Chaplin for the transcript.
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