President Cannot Cut Public School Funding; Schools, State and Local Governments Likely to See Aid in July/August; Jobless Claims Remain Elevated, At Risk; National MEI Index Falling Again
07/09/2020
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Policymakers in California, Florida, New Jersey, Texas, and others showed us in recent weeks that the numbers and concern for public safety are the priorities helping to dictate policy.
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Initial jobless claims declined to 1.314 million from last week’s 1.413 million. This was the 14th consecutive week they declined. Today’s single number is still higher than any single week of claims we saw during the Great Recession. We believe next week’s initial jobless claims data is at risk because of the reopening rollback. Those claiming unemployment insurance rose to a record 32.922 million, an important data point for investors and policymakers.
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The reopening rollbacks have already started to dampen mobility and engagement data. Data for the week ending July 4 was released on July 8, and the Dallas Federal Reserve’s national Mobility and Engagement Index (MEI) turned negative. The Dallas Fed’s weekly economic index also started to fall.
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As a result of the likely negative impact from the reopening rollback, we expect state and local government aid to be prioritized by the House, Senate, and White House. We believe pressure is building, and federal relief is likely to take shape when both chambers are in session July 21-31, and then the Senate remains in session from August 3-7.
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The President has no ability to cut federal funding to public schools unilaterally. Only Congress has the ability to adjust funding. The federal government provides about 8% of public school funding, according to a Center on Budget and Policy Priorities report, citing Census Bureau data.
