Public resources for public stuff!
I was asked to give a two-minute speech at the Public Banking rally on Friday, October 7th. Here's an extended copy of some remarks I prepared.
A couple thank yous first. Thank you everyone for coming out. Thanks to the Public Banking Coalition for having me, both here today and as a nominated member of the Board of Advisors to the Philadelphia Public Financial Authority. You've done such incredible work to get us here. I also wanted to thank Philadelphia Democratic Socialists of America for sponsoring my membership on that board and for all the work the chapter is doing in this city.
My name is Dave Backer and I'm an organizer and parent. But I'm also a professor of education policy. My research focuses on school finance. I'm particularly interested in school buildings finance. I'm sure you can guess why: living in Philadelphia, if you're at all concerned about educational justice, you have to think about what's happening to our buildings. I've been focusing my time and energy on understanding just how the hell the money works. In my research one thing I have found is that we need public resources for public stuff. Here's why.
I'm doing some new research with an awesome comrade and researcher Eleni Schirmer. We're looking at school bonds and racial capitalism. What do I mean by that? I mean the ways that racism and capitalism work when it comes to the resources that schools need to pay for big facilities projects. New playgrounds, roofs, ventilation systems, electrical systems, and stuff like that. Did you know that public school districts, our public school district, has to go to Wall Street to get private loans for that stuff? Did you know that that's how it's been here in Philly and Pennsylvania for a really long time?
The thing about going to Wall Street is that everyone's there to make a buck, no matter what. It doesn't matter if your city's schools have asbestos poisoning, outdated ventilation, defunct fire alarms, and windows that don't open. It doesn't matter if there's mold the library. It doesn't matter if there's lead in the water fountain. It doesn't matter if your city has been ravaged by neoliberalism, austerity, deindustrialization, segregation, and terrible conservatives at the state level. Nope. Wall Street wants money. And the district has to pay Wall Street to get the resources it needs.
Actually, since we all pay the property taxes that the district uses to pay back and pay for these loans, it's actually us that have to pay Wall Street.
We have to pay credit ratings agencies to rate our district as just above junk. (Did you know that Wall Street likes to call school districts junk?)
We have to pay the big private banks since they're the ones who have all the capital needed to get this deal done. (By the way, we don't even know how much these banks take on these deals. We have to pay financial advisors.)
We have to pay financial lawyers. And finally, we have to pay the interest on the loan we get. Who's lending us the money? Anonymous rich old people who don't have to pay taxes on what they make off of us.
Eleni and I are researching the racial cost of all this. Do districts that serve Black, Indigenous, and people of color pay more on these deals than districts that are predominantly white? Is there a relationship there? Is there a discount for being white? Is there a penalty for not being white? Let me tell you the initial results.
On average, we're finding that diverse districts pay 15% more interest than predominantly white districts for Wall Street loans. That's bad!
But it gets worse. On average, we're seeing that diverse districts pay 35% more in Wall Street fees than predominantly white districts.
So cities like Philly have to pay more for the resources we need for our school buildings. And guess what this does to a district over time? It means we can't take care of the buildings like we should! If you're taking care of your house and you don't have enough money every month and every year for what needs fixing, you're going to cut corners. You're going to leave things until there's an emergency. You're going to live with mold, leaking roofs, bad smells, and toxic water because you don't have a choice. That's what I think has happened to our school district and districts all over the country.
Oh, and have you heard about this thing climate change? It turns out school buildings emit a lot of carbon into the air and these buildings are key emergency infrastructure during climate disasters. We need more money than ever for our school buildings to stop putting carbon in the atmosphere and get the buildings ready for more heat waves. More storms. More floods. More droughts. Remember when we had to close the schools because it was too hot at the beginning of this year? Remember how teachers don't have air conditioning? Remember when I-76 flooded last year?
When it comes to public schools, private credit is racist. It's bad for the environment. It's bad for the public. That's why we need public credit for public stuff. A public financial authority and a public bank can help us take this on and right this wrong. We need an entity whose mission is to look for ways to get around that racist Wall Street system. That's the Philadelphia Public Financial Authority.