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Archive for the ‘Department of Treasury’ Category

As the economy continues to weaken and talks of a “double-dip recession,” Federal Reserve officials are indecisive on how to respond, CNBC reports.

In an interview Wednesday on CNBC, Dallas Fed President Richard Fisher declared unambiguously: “I think we’ve done enough.” Fisher mentioned that the Fed has already dished out $1.4 trillion into the banking system, banks hold about $1 trillion of excess reserves, and  nonfinancial corporations hold around $1.5 trillion of cash on their books.

However, during an interview with the Washington Post, St. Louis Fed President James Bullard said that the Fed should step up again if the economy becomes weaker. “If the economic situation changes, policy should react,” Bullard told the Washington Post. “You shouldn’t sit on your hands…I think there’s plenty more we could do if we had to.” Read more

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By Jeff Pett, Fleetwood Group

What is going on in education in this economy?

Schools across the country are scrambling to come up with the funds for both buildings and operations. When times are good this can be difficult, but since the fall of 2008 the funding has fallen off precipitously creating a funding gap in most states and raising the “degree of difficulty. 

Where does all that education money come from, anyway?

According to the U.S. Department of Education Website, “The responsibility for K-12 education rests with the states under the Constitution.”  Most funding for K-12 education still comes from “local” sources, whether that is very local (like a city) or a state (not as local).  In fact, about 83 percent of school funding still comes from state and local coffers. The federal government’s share is about 8.3 percent. (For those of you doing quick math, yes, you are right. That still leaves around 9 percent.  Most of that remaining amount comes directly from parents funding private schools.)

So no matter what the federal officials are promising in education spending, their hands are tied by the constitution as to how much they can really help, and the real challenges are faced by the states. That is both good and bad news. Every one of us has more of an opportunity to shape how our education dollars are spent since we live closer to where the majority of decisions are being made.  But if you live in a state that is particularly hard hit by a recession (like here in Michigan), there are very few options to keep our schools running well.

In Michigan, back in the 90’s, we passed Proposition A which moved most of the funding for schools from our property taxes to the state sales tax.  While this had the positive effects of helping the poorer districts and relieving the property tax burden on homeowners, it took a lot of decision making further away from the local cities and towns. 

Now with the auto industry being hit hard people, are moving out of the state in droves causing all areas of tax revenues to drop.  The state has been cutting the amount of per pupil funding putting school districts in the unenviable position of having to cut programs and staff to stay financially viable.

Sidebar: Anything we fund via tax money is very vulnerable to an economic slump. Since the number one expense for schools is staff pay and benefits, maybe we should tie pay and benefit levels to percent increase/decrease in those revenues. Jobs would be secure, but pay would be variable. Very radical, I know. We’ll leave that for another time.

Obviously, this is not just a Michigan problem. Pick your state, pick your impacted industry and you have a similar story. 

Now enter those of us trying to make a living selling into this market. I don’t have to tell you how tough it is. But with so much pain and angst reverberating through most school systems whose administrators are just trying to figure out how to heat buildings and keep teachers in the classroom, it is pretty easy for them to put off buying furniture and equipment for another year.  We may not have seen the bottom of this downturn. 

Unfortunately, that means a lot of people are losing their jobs as we speak, both in schools and in the businesses that supply schools. Our industry is “shaking out.”  Until the economy turns around enough for people to pass school bond issues at the polls, while also spending more money that generates tax income, we are likely to see these trends continue.

Are you ready for at least one sign of hope? 

According to the Michigan Department of Treasury Website, in our state—which has the nation’s highest unemployment—24 of the 35 reported (to date) school bond issues were passed this month (69 percent).  That compares to 47 percent in 2007 (the last full year before the economic meltdown) and 48 percent in 1999 (the end of the decade of almost universal prosperity). 

If people in Michigan are willing to approve a significantly higher percentage of tax increases for their schools in the midst of our economic misery, maybe we ARE near the bottom!

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According to a government report released Monday, the 22 banks that got the most help from the U.S. Department of Treasury’s bailout programs cut their small business loan balances by a collective $10.5 billion over the past six months. The article “Small business loans: $10 billion evaporates” mentions that out of the 22 banks, three make no small business loans. Since April 2009, out of the remaining 19 banks, 15 have reduced their small business balance.

The article also mentions that the 22 banks have cut their collective small business lending by four percent within the last six month period and have a cumulative balance of $258.7 billion as of September 30, 2009. For the past six months, the U.S. Department of Treasury has required the biggest banks receiving Troubled Asset Relief Program (TARP) funding to report their small business lending on a monthly basis.

For more information about the new report, visit http://www.ustreas.gov/ and
Read the article, “Small Business Loans: $10 Billion Evaporates” and let NSSEA know your thoughts!

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