Investment Banks Versus Hawaii's Public Schools

Hawaiian school children have most Fridays off. To absorb a $468 million budget cut over the next two years Hawaii's Department of Education has imposed 17 furlough days this school year. Meanwhile, investment banking giants Goldman Sachs and JP Morgan Chase each reported multibillion dollar profits in the third quarter of 2009, just one year after needing government assistance to survive. With Hawaii's public schools resorting to a four day week while investment banks resume earning astronomical profits, one is left to wonder - why is only one of these institutions too big to fail?

Hawaii's Department of Education has a severe budget problem. In addition to more than $200 million in cuts already facing the DOE, the governor imposed cuts in most state departments of around 14% to balance the state's budget[i]. Politics and union contract squabbles aside, the result of the cuts is that on most Fridays this year Hawaii's public schools will shut down. The school week will be only four days long.

Schools have traditionally averaged 180 days of instruction per year in Hawaii. This year, that number will be 163. Teachers and students will be held responsible for the same amount of material despite the reduction in days.

On their website, the Department of Education acknowledges that "they know student learning will be affected" and that "teachers are revising their lesson plans for the four remaining [days] to assure grade level skills are addressed during [the] time"[i]. Sounds encouraging.

While students in Hawaii are cramming five days worth of learning into four days, many large financial institutions have resumed earning profits faster than you can say 'school's out'. Little more than a year after the government authorized hundreds of billions of dollars to ensure the survival of the nation's ailing banks (JP Morgan and Goldman received a combined $35 billion) they are on their feet again - and business is good.

In the three months spanning July - September 2009, JP Morgan reported $3.6 billion in profit[ii]. Goldman Sachs reported a more modest $3.19 billion profit over the same period[iii]. Bloomburg.com wrote that JP Morgan compensated its investment banking employees an average of $353,834 in the first nine months of 2009, while Goldman employees pulled down an impressive $386,429[iv].

If you are growing immune to seeing the 'b word' next to dollar signs, think of it like this: The $6.79 billion these companies earned in 90 days works out to roughly $75.4 million every day, including Sundays. By that measure, the two companies could 'bail out' the state of Hawaii's public school system with profits earned in just over 6 days - and that's at the tail end of the worst economic downturn in a quarter century.

And imagine if the other banking giants chipped in a few days worth of profit. The banks could easily pool their resources and come up with the money needed to allow Hawaiian children to go to school five days a week, preventing an educational 'systemic failure' where 'the whole system shuts down.' I mean, we did it for them, right?

I suppose its farfetched to ask giant corporations to help fund public schools. They already pay for health insurance, 401k - and don't forget - bonuses. Besides, America will remain competitive even if our children only go to school four days a week (or three if further cuts are required). We will do what is necessary to ensure that each child receives a quality education because it is critical to the success of our future workforce, and is a pillar of American greatness.

Talk about farfetched.

[i] NY Times article, In Hawaii, Cuts Reach to Core Functions. December 19, 2009.http://www.nytimes.com/2009/12/20/us/20hawaii.html?_r=1&scp=2&sq=hawaii&st=cse

[i] State of Hawaii, Department of Education. http://doe.k12.hi.us/news/furlough/index.htm

[ii] JP Morgan website. http://www.jpmorgan.com/cm/cs?pagename=JPM_redesign/JPM_Content_C/Generic_Detail_Page_Template&cid=1255279857525&c=JPM_Content_C

[iii] Goldman Sachs website. http://www2.goldmansachs.com/our-firm/press/press-releases/current/pdfs/2009-q3-earnings.pdf

[iv] Bloomburg Media. http://www.bloomberg.com/apps/news?pid=20601087&sid=apBuJ_nxE5Ok