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Budget Brainstorms

If you’ve been paying attention to recent reports, you’ve probably noticed that school districts aren’t the only ones struggling with their current budget. The federal government is trying to solve their budget issues, and a resolution seems unlikely before the 11th hour. One solution that has gained favor, according to a recent report called ‘Chained CPI’ Seen As Tactic To Trim Deficit on NPR: Morning Edition, is changing how the federal government calculates the cost of living adjustment (COLA), a tactic that school districts might be wise to consider.

Currently, the government uses the consumer price index (CPI), which measures the cost of a group of items the average individual purchases and how much prices are inflating. The problem is that the CPI doesn’t give the consumers any credit: “When the price of apples goes up, you buy oranges or bananas,” points out senior policy analyst at the New American Foundation Marc Goldwein. That slight difference causes CPI to overstate inflation. The solution is switching to chained CPI, which takes into account consumers’ making the switch from a more expensive to a less expensive item as market value fluctuates.

How much would this save? According to Goldwein, “most experts believe [CPI] leads inflation to be overstated by about three-tenths of a percentage point per year.” While that may not sound like much, Goldwein estimates this could save the federal government about $300 billion over the next decade.

If school districts made a similar move in the way they calculate COLA, they would save money in the long run that could be used more effectively in other areas. Let me clarify, in no way am I encouraging cutting teacher salaries, but instead rethinking how those salaries are assigned. Instead of spending excess money on COLA, districts could pay teachers additional money for taking on leadership roles and responsibilities. Just like in every other industry, teachers could receive more compensation for more work instead of just more years. While the change to calculating COLA is not going to be the answer to every problem in our schools, steps in the right direction will get us to our destination of a vibrant public school system much faster than taking no steps at all.

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