Good day, CharterFolk.
Like many of you, I’ve been following the heartbreaking events unfolding in Texas. So many lives lost — so many of them young people.
Our thoughts and deepest sympathies go out to all TexasFolk who have been affected.
The One Big Beautiful Era
Coming off the 4th of July break, I’ve been wanting to turn attention to the passing of the one big beautiful bill.
Because, in terms of public education, we are entering what we could call the era of the one big beautiful bill.
A sliver of the new law pertains directly to school choice matters. A new tax credit program has been created to provide tuition support for private education.
I will return to that policy innovation in upcoming posts.
As to the broad contour of OBBB’s merits, I offer no summary evaluation. Much of that lies outside the CharterFolk lane.
But I do think it is right to talk about its broad sweep as a comparison point for what is happening in our world.
Just as the OBBB envisions a world where we take benefit today and push the bills out into the future …
… so have we been doing in public education for decades.
And that one big beautiful bill — the one we’ve been handing forward to this generation of kids, and to future generations — is now coming due.
The problem is that we struggle to see the magnitude of what is being created.
A Moment in Context
In recent days, parallel to the approval of the OBBB, we have seen the federal government decide to withhold over $7 billion in mostly Title I and Title III funding.
Across the country, we have seen alarm bells going off about the adverse impact on school budgets.
It is bad. Do not get me wrong. Any reduction in federal funding for education is counterproductive, and putting schools through a last-second fire alarm only makes it worse.
But I also see this as an opportunity to place the moment in context. Because what’s happening quietly behind the scenes — the ever-growing impact of unfunded pension liabilities — is causing damage on a much larger scale. And almost no one talks about it.
All this has been made plain
… in a publication that came out last month,
… which shows the scale of the one big beautiful unfunded liability bill that is being handed to public education today.
Equable showed that since the beginning of the century, pension liabilities have grown by $600 billion, a pace of growth far outpacing overall funding increases.
In percentage terms, that is even faster growth than the student loan crisis.
It is hard to assess the true operating cost of unfunded pension liabilities. But this chart speaks volumes.
Pension contributions have grown enormously since 2001, roughly tripling from 7 percent to 21 percent of payroll.
Of that, the cost of “normal” pension expense – the cost of current pension obligations – has remained essentially flat. Meanwhile, the cost of not funding prior pensions has increased tenfold, from roughly 1.5 percent of payroll in 2001 to 15 percent in 2024.
Using a reasonable amortization approach – say, 6 percent interest – the cost of servicing a $600 billion unfunded liability exceeds $40 billion per year.
That’s six times the impact of last week’s $7 billion federal cut.
And yet no one says a word.
The Unequal Burden
Even that $40 billion figure doesn’t capture the full picture.
It assumes pension costs are distributed equally across all school districts. But they are not.
As the Equable report shows, large school districts have accrued significantly larger pension liabilities. Their unfunded pension costs could be ten times the cost of this latest federal withholding.
Every year. In perpetuity.
And that doesn’t even include the unfunded retiree health care benefits coming due in places like Los Angeles, as I wrote last week.
Nor does it account for the new investments being made in private school education — like the tax credit program I mentioned at the top of this article.
People are wondering how big that program will be.
Will it be $5 billion or $50 billion?
Whatever it turns out to be, every one of those dollars will go toward current educational costs — not historic obligations that were never paid.
So the perceived return on investment from that new funding will appear dramatically higher than the return on funds sent into public systems burdened by past costs.
A Bill Coming to Charter Schools – the Future of Public Education
This is what happens when bills are not paid when they come due.
You pass one big beautiful bill to the next generation.
To the future of public education.
And charter schools, as we all know, represent that future.
We are the ones who will be expected to pick up this tab.
A tab that may prove simply impossible to pay.
That is why I will keep encouraging our world to go deeper into the economic realities facing public education today.
The rest of the world may choose not to pay attention.
But we cannot.
We will be the ones left holding the bill.
The one big beautiful bill.
One so large it threatens the future of public education itself.