Barkat: Richer cities must pay more for education

Nir Barkat
Nir Barkat

The Jerusalem Mayor leads a plan to redistribute education budget allocations according to a city's socioeconomic ranking.

The plan led by Jerusalem Mayor Nir Barkat and dozens of Israeli local authorities heads is based on simple, albeit long-forgotten, principles of solidarity and mutual responsibility: the strong local authorities will forego part of the budgets they receive from the state, and make it possible to increase the budget to the disadvantaged local authorities.

The initiative by Barkat and his colleagues in the Forum for Distributive Justice set up within the Federation of Local Authorities in Israel is designed to correct what he describes as a "historical injustice." The source of this injustice lies in the uniform method used by the state to finance educational and welfare services for its citizens.

The forum, headed by Barkat, objects to this method, asserting that it does not take the economic and social situation of the local authorities in Israel into account, and in particular perpetuates conspicuous social gaps. According to Barkat, this forum currently consists of 50 disadvantaged local authorities from all over Israel. Sources in the Federation of Local Authorities opposed to the initiative say that the number is lower - at most 32 local authorities.

Under the new plan, which is also supported by the Ministry of Finance budget department, the method of allocating money to the local authorities will be changed, possibly as early as 2016. The new method will make it possible to allocate differential budgets, so that the well-off local authorities receive less and disadvantaged authorities more. Those in favor of the plan believe that such a method will facilitate a just distribution of the state budget to the public: the well-off local authorities will still be well off, but their prosperity will be curbed. The poor local authorities will begin to strengthen, and their residents will gradually escape the poverty trap.

Figures presented by the forum headed by Barkat shows that Israel has 38 "wealthy" local authorities, meaning those rated 8 or higher on the Central Bureau of Statistics' socioeconomic scale. Israel also has 115 "poor" local authorities with ratings of 1-4 on that scale. The situation of 42 local authorities is defined as "neutral," with ratings of 5-7. Things are slightly difficult there, but they are able to maintain a reasonable balance, and get along without excessively large budget-balancing grants that the Ministry of the Interior distributes to local authorities in difficulties. The annual budget balancing grants distributed to the local authorities total NIS 3.4 billion.

Barkat's Jerusalem is rated 4 on the Central Bureau of Statistics' index. Calculations by the Distributive Justice Forum, based on official data, highlight the wide social gap. In 2013, the Lod municipality spent an average of NIS 6,200 per pupil, The same year, in another city, just a 15-minute drive from Lod, the Tel Aviv municipality spent NIS 15,000 per pupil. "This is an unacceptable situation," Barkat told "Globes." "The state invests NIS 6,000 a year in a student from Lod and NIS 15,000 a year in a student in Tel Aviv, just because they live in different jurisdictions. These are huge gaps, and instead of narrowing them, the state widens them. If the state doesn't invest in children, it loses them, misses an opportunity, and harms its own economy. The state meets those children, in which the right investments were not made, later, after they go to steal a car. This is a loss at the national level."

"It is impossible to accept the gaps

The state distributes its budgets to the local authorities per number of residents for educational and welfare services. The rule is the same for Savion, Dimona, Modi'in, and Upper Modi'in. The well-off local authorities, however, which have good sources of revenue from property taxes, such as industrial enterprises, commercial areas, and large infrastructure facilities, can afford to supplement the educational and welfare basket for their residents. The disadvantaged local authorities are struggling with great distress, and have been scraping the bottom of the barrel for years. They lack sources of revenue, many of their residents need a great many welfare services, and their educational budget is too small, because most of their money goes for welfare.

The Distributive Justice Forum mayors say that over half of the state's residents are in this situation: "Such gaps, which harm children in 115 cities and local authorities making up 56% of the state's residents, are unacceptable," Barkat says.

The cost of correcting this historical injustice is NIS 2 billion a year to be given by the state to the disadvantaged local authorities, instead of to the well-off local authorities. According to the forum members, this will be enough to give the poor local authorities hope of real social justice in the distribution of the public's money.

"Globes": The well-off local authorities hear of this plan, and object. A mayor whose city has a high rating on the Central Bureau of Statistics index says that the attempt to strengthen the disadvantaged at the expense of the well-off will weaken the former, and detract from the quality of services for their residents.

Barkat: "We don't want to decrease the budgets of the wealthy cities and harm them. We propose leaving everything they have, and transferring only part of their future growth to the poor cities. The rich cities will not be harmed; they will merely grow more slowly. The poor cities will benefit from larger and more substantial budgets for education and welfare, quality of life, and escaping the poverty cycle. We'll narrow the gaps between rich and poor, and especially create equal opportunity for every child in the country. We'll make sure that every child can succeed. This is social solidarity and mutual responsibility. The result of these gaps created by this historical injustice is not understood. So, yes, the rich have to pay more and receive uniform services, especially in areas like welfare and education."

The well-off will slow to a walk, and the disadvantaged will start to run

The Federation of Local Authorities in Israel, whose chairman is Modi'in-Maccabim-Re'ut Mayor Haim Bibas, is currently divided. The well-off are trying to fend off the disadvantaged's initiative, while the Forum of the 15 largest and wealthiest cities is shrinking against the offensive by over 50 disadvantaged local authorities. The latter number is not final; it expected to increase.

Bibas's city is rated 8 on the Central Bureau of Statistics' index, making it a well-off city that stands to lose a lot of money if the calculation method is changed. Bibas is currently in discussions with Ministry of Finance budget department head Amir Levy in an attempt to formulate a uniform "educational basket" for all Israeli students. The idea is that just like the state provides a clear and well-defined health basket for every citizen, an educational basket will be defined for all the educational services provided by the state to its students. The forum of well-off local authorities believes that this arrangement will make it possible to correct the historical injustice of the uniform budgeting method.

The opponents of the disadvantaged local authorities' initiative assert that those local authorities receive more money from the state in any case, in the form of budget balancing grants and development grants, and the well-off local authorities are in effect being punished by the change in the budgeting system for doing well.

Barkat: "This is being disingenuous. I'm talking with you about the state of the disadvantaged local authorities after they have received the assistance and support they get from the state. For example, the Jerusalem municipality gets NIS 700 million a year from property taxes on businesses from a population of 850,000. The Tel Aviv municipality gets NIS 2 billion from property taxes on businesses from 500,000 residents. So, yes, it's true that the disadvantaged local authorities receive help, but their indemnification is negative, which is absurd. Per resident, we are half of Tel Aviv. Were it not for the grants from the state, our situation would be much worse. This is a demagogic argument."

Are you talking to your colleague, Tel Aviv Mayor Ron Huldai, about what you are doing?

"We aren't talking about that. I assume that our positions are somewhat opposed in this matter."

Are we at the beginning of a war in the Federation of Local Authorities?

"I don't believe it. The model we are proposing is very soft; it's not going to behead anyone. Our method is transparent and public. Cities able to grow at a run will simply slow down a little, or switch to a walk, while the disadvantaged will be able to run forward."

It is being argued that the money will not be used for education and welfare, but to distribute jobs and favors to cronies and all sorts of affliction and pathologies that have already afflicted the local authorities.

"That's absolute nonsense. Our commitment in this matter is explicit. All the money will be spend on education, welfare, and getting out of poverty. There will also be control and supervision mechanisms."

"We'll flex our muscles"

The hostile attitude by the mayors of the large cities to this plan was expected, and the forum of the disadvantaged local authorities prepared for it by conducting a public opinion survey a month ago through the Geocartagraphy Institute. The survey was conducted among 700 residents of the well-off cities, including Modi'in, Tel Aviv, Herzliya, Haifa, and others. Barkat is encouraged by the results: over 65% of the residents of these cities in the survey believe that it is right for a well-off city to concede part of its budgets in favor of the disadvantaged cities. 69% of the survey respondents believe that residents of disadvantaged cities receive fewer opportunities in education, employment, and municipal services than residents of the well-off cities. "This is solidarity," Barkat says. "I understand that it's difficult to rise above challenges, but it's necessary. It's so natural for it to happen, and there's really no reason to quarrel with us about it."

How do you define a disadvantaged authority and a well-off one?

"There were two possible models, and the proposed model, which was devised by the Ministry of Finance, is the one we're going with, because it's acceptable to us. A disadvantaged authority is one with a rating of 1-4 on the socioeconomic index, and a strong authority is one with a rating of 8-10."

Bibas who in the past also served as chairman of Prime Minister Benjamin Netanyahu's election campaign, is trying to thwart the initiative of Barkat and his associates by pressuring the Ministries of Finance and the Prime Minister, and by arguing that the money taken away from the well-off local authorities will pay for inflated municipal agencies and wasteful festivals in the local authorities defined as disadvantaged.

The forum led by Barkat is aware of Bibas's campaign and his connections in Jerusalem, and is preparing to step up the tone of the struggle to introduce a differential system. "Just before the Knesset recess, three MKs - Orly Levy-Abekasis, Miki Zohar, and Yoseph Yonah got signatures from 63 MKs on a bill to change the budgeting method to a differential one. We have a strong Knesset lobby. I'm optimistic, because both the Prime Minister and the Minister of Finance are committed to such a measure, and the other ministers also support it. In any case, we're not giving up, and if we have to flex our muscles at some point, there won't be any problem doing it," says Barkat.

Published by Globes [online], Israel business news - - on August 30, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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