The key to making intelligent public policy decisions is foresight. Looking back today, with 20-20 hindsight, at the Clinton era decision to allow banks to become unregulated insurance companies; at the accumulation of decisions to privatize the gains and socialize the risk of housing investment; and at the Federal Reserve’s persistence in flooding the world with cheap dollars, we can only smack our hands to our foreheads and exclaim, “What were they thinking!”

The answer, of course, is that they were thinking about the past. They were looking at history and projecting it forward. If we don’t deregulate finance, we’ll be left behind in global competition. If we don’t assure universal access to “the American dream,” we’ll be failing the poorest among us. If we don’t keep interest rates low, we’ll never get out of this “jobless recovery.” The results of these projections, we now know, were disastrous, not because the intentions were malevolent (at least not entirely), but because the projections were mistaken. No one, or at least too few of us, thought about the questions, “What happens if things don’t go as expected? What will be the consequences of some alternative set of projections?” We’ve heard a lot since the financial crisis about banks undergoing “stress tests.” Where were they before the crisis?

Few of us in Maine have much say in formulating the rules of the Dodd-Frank re-regulation of the financial system, or in redesigning housing subsidies or in setting Federal Reserve policies. But we can learn important lessons from the failure to play out a variety of “what if” scenarios before making public policy decisions. And the single most important arena where these decisions are being made today is in town halls across the state with regard to municipal infrastructure, most importantly our schools.

In the 1970s and early ’80s, Maine’s school population declined dramatically, falling from 250,000 to 200,000. Then, from the late 1980s through the mid-’90s, it reversed course, rising back up to about 220,000. This growth, coupled with

3-acre, suburban land use regulations and relatively cheaper land in rural areas, sparked an explosion of sprawl that was accompanied by hundreds of millions of dollars of taxpayer investment in new schools.

Since the late ’90s, however, school enrollment numbers have resumed their downward course, dropping to about 187,000 as of October 2011. Given our state’s current demographic structure — an aging population with fewer and fewer women of child-bearing age — the number of births in the state will naturally continue to decline. This reality, absent a burst of immigration, will naturally be followed several years later with a declining number of youngsters entering kindergartens across the state. Current demographic projections indicate a continued enrollment decline toward 170,000 over the coming decade.

The 187,000 students reported as attending Maine public schools last October were spread across 604 different schools. Schools ranged in size from a high of 1,525 attending Thornton Academy to four schools with fewer than 10 students. The average school size was 310, and the median school size was 275 — meaning 300 schools had more than 275 students and 300 schools had fewer than 275 students.

The public policy implications of these facts is staggering. How do citizens across the state combine recognition of the stark realities of our demographic structure with an awareness of the uncertainties of our economic future? How do they then mix in an accounting of the aging physical condition of schools — some overcrowded and some half empty — with a desire to organize a learning environment best suited to a world where financial success increasingly requires educational excellence? And then, how do they overlay those educational considerations on the fiscal realities of their communities who are struggling to make do in a world of frustratingly slow employment and income growth?

In many ways, this task makes figuring out how to regulate synthetic collateralized debt obligations look like child’s play. But the central point for both remains true. It will be done best if it is done in an open, fully transparent way that examines a wide variety of possible future outcomes and proceeds on an admittedly uncertain but collectively affirmed best guess.

Charles Lawton is senior economist for Planning Decisions, a public policy research firm. He can be reached at:

clawton@maine.rr.com

 

Copy the Story Link