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Uncle Sam’s Sketchy Finances and the Future of Georgia


• Dr. Matthew Ladner

Georgia #EduIntersect header
In Georgia, a fierce battle looms between the needs of public health care and education. Tomorrow, ExcelinEd will release a new report At the Intersection of Education & Aging: Baby Boomer Retirement, Student Enrollment Growth and the Future of Georgia Education. The report outlines the coming crisis and what Georgia can do today to prepare for it. In this post, report author Dr. Matthew Ladner briefs us on the issue.

UPDATE: The report At the Intersection of Education & Aging: Baby Boomer Retirement, Student Enrollment Growth and the Future of Georgia Education is now live.


The United States Treasury puts the federal debt at $19 trillion, and worse still it has unfunded entitlement liabilities at $55 trillion. An average of 10,000 baby boomers per day will reach the age of 65 between now and 2030, whereupon all surviving baby boomers will have reached the age of retirement.

No one can know how or even whether Uncle Sam will put his finances in order, but this is more than just a federal issue. Last year 30 percent of the funds spent by Georgia’s state government originated from the federal government. Some thought should be given to the sustainability of such revenue in the medium term. More worrying still, changing age demography is going to have a direct impact on Georgia’s state budget in addition to an indirect one through federal finances.

The status quo in Georgia is not an option—it’s going to change one way or another in a broad and necessary configuration of the delivery of vital state services. The sooner this process starts, the less jarring the changes will prove.

Even if Uncle Sam’s sketchy finances were not an issue (but they most certainly will be), Georgia’s age demographic change will make for increasing difficulty. Baby boomers will retire in ever growing numbers and send their grandchildren and even great grandchildren off to school. Meaning Georgia will see a rise in the percentages of elderly and youth populations.

Projected Growth of GA Youth and Elderly

In Georgia, the United States Census Bureau projects an increase of over 450,000 residents aged 5-17 between 2010 and 2030, and an increase of just over 927,000 for the elderly population. Economists measure the strain of age demography through total age dependency ratios. The concept: young people don’t pay much in the way of taxes and require expensive state services such as education. The elderly tend to have passed their peak earning years so tend to pay fewer taxes as well while drawing significantly upon state health care spending and other services.

The total age dependency ratio involves adding the number of children under age 18 to the number of residents aged 65 and older, and then divide that sum by the number of residents aged 18 to 64. In other words and painting with the broadest possible brush: how many people are riding in society’s cart (young and old) compared to the number pushing it?

Georgia’s number of people riding in the cart per 100 pushing will increase from 57 in 2010 to a projected 73 in 2030.

Georgia Age Dependency Ratio

There is no single thing to be done about this—but Georgia policymakers need to recognize the grim scale of the problem lying in their immediate future. States share the cost of the Medicaid program with the federal government, and the elderly are among the highest cost beneficiaries on a per enrollee basis.

Higher age dependency ratios also serve as a drag on economic growth. The Georgia NAEP Proficiency Ratesdemand for state funding on health care for the elderly and education for the expanded K-12 population will go up far faster than the supply of state revenue. People living on fixed income also have an empirically confirmed penchant for voting against bond and override in school district elections.

What can be done to prepare Georgia for the coming storm? Many of the middle aged taxpayers of 2030 and beyond sit in Georgia classrooms right now. Future difficulties can be seen clearly now so it would be a fantastic idea to educate these kids to the highest possible level.

Fortunately Georgia has a track record to build upon in improving academic outcomes, as shown in the data from the National Assessment of Educational Progress above.  Just for sake of comparison, the highest performing state has proficiency rates near 50 percent in all four NAEP exams. That state (Massachusetts) also compares well to various European and Asian countries when NAEP is compared to international exams. Georgia has made progress, but in the immortal words of Dr. Ian Malcolm:

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Click here to view the complete report.

 

Visit ExcelinEd.org/FacetheStrain to learn more about how this issue will impact states nationwide.

 


About the author


Dr. Matthew Ladner @MatthewLadner

Matthew@excelined.org

Dr. Matthew Ladner is the Senior Advisor of Policy and Research for the Foundation for Excellence in Education. He previously served as Vice President of Research and Goldwater Institute. Prior to joining Goldwater, Dr. Ladner was director of state projects at the Alliance for School Choice. Dr. Ladner has written numerous studies on school choice, charter schools and special education reform. Most recently, Dr. Ladner authored the groundbreaking, original research Turn and Face the Strain: Age Demographic Change and the Near Future of American Education, outlining the future funding crisis facing America’s K-12 public education funding. He also coauthors the American Legislative Exchange Council's annual Report Card on American Education: Ranking State K-12 Performance, Progress and Reform. Dr. Ladner has testified before Congress, the United States Commission of Civil Rights and numerous state legislative committees. He is a graduate of the University of Texas at Austin and received both a Masters and a Ph.D. in political science from the University of Houston. Dr. Ladner is a Senior Fellow with the Foundation for Educational Choice. He lives in Phoenix, Arizona.