Three Towns, Three Budgets, and What Immigration Looks Like Locally

Somebody in a television studio is about to tell you that immigration is good for the country, and somebody in the next studio is about to tell you that it is bad for the country, and neither of them will ever sit through a school board budget hearing. That is a shame, because that is where the argument lands. Not on a chart. On a Tuesday night, in a gym with folding chairs, where a board member says the district is short by a million dollars and nobody can say why.

National arguments miss a plain fact: costs and benefits of immigration do not fall on the same budget. A plant owner gets a workforce. The federal Treasury gets payroll tax. The school district gets a classroom full of new children. The county gets a bigger jail census. The hospital gets the emergency room. Each of those is a different checkbook, run by a different set of elected people, and none of them can pay a bill with someone else's surplus.

So let us do what the cable shows never do. Let us build three towns and do the arithmetic.

Read this first: every town below is a hypothetical, and every number is invented to keep the arithmetic clean. None of them describes a real place. The numbers are not measurements. They are a way to show you how the ledgers work, so that you can plug in your own district's real numbers. A worksheet for doing that is in A Worksheet for Reading Your School District's Budget Line by Line.

The laws that set the rules

Before the towns, five pieces of law that decide who pays.

Plyler v. Doe (1982). Texas had passed a law withholding state funds from school districts for the education of children not legally admitted to the country, and letting districts bar them from enrolling. The Supreme Court, by a vote of five to four, in an opinion by Justice Brennan, held that the law violated the Equal Protection Clause of the Fourteenth Amendment. Chief Justice Burger dissented, writing in substance that the policy might be unwise but that the Constitution did not forbid it, and that it was not the Court's role to make the policy choice. The result: public schools must enroll children regardless of their immigration status.

Notice what I just did. The holding is a legal fact. Whether Plyler was rightly decided is a value and a constitutional-interpretation claim, and conservatives differ. Some say the Court invented a right out of an equal-protection clause that was written to protect freed slaves. Others say the decision is settled, that children should not be punished for what their parents did, and that the schools function better when every child is in the classroom. You can hold either view. What you cannot do is ignore what the decision means for a district's checkbook: the school must educate the child, and someone has to pay for it.

EMTALA (1986). The Emergency Medical Treatment and Active Labor Act, enacted in 1986, requires a hospital with an emergency department that participates in Medicare to give a medical screening to anyone who comes in, and to stabilize an emergency condition, whether or not the patient can pay and whatever the patient's immigration status. It is a duty, and Congress did not attach a check to it. For the broader picture of why small-town hospitals struggle, see Eleven Questions About Why Small-Town Hospitals Struggle and What Helps.

Emergency Medicaid. Federal law limits Medicaid coverage for people who would qualify except for their immigration status to emergency services. Medicaid pays part of the bill for those emergency services, including childbirth, and the rest is the hospital's loss.

The 1996 welfare law. The Personal Responsibility and Work Opportunity Reconciliation Act put limits on federal means-tested benefits for noncitizens, including a five-year bar for many lawful immigrants. The story of that law is in two vetoes, one signature and the 1996 welfare law that put marriage in statute. The upshot is that most federal benefit programs are closed to the unlawfully present, which pushes the cost of the services that the courts and Congress require onto state and local budgets.

Local property taxes. Most school districts are funded by a mix of state aid and local property taxes. The formula varies from state to state, so use your own state's. In my towns, I will use a simple one: state aid follows the child, and a share of local property tax goes to the schools.

Town 1: Packer Falls, the meatpacking town

A hypothetical. Packer Falls has one big employer, a meatpacking plant. The plant hires hundreds of workers, many of them immigrants who came lawfully, and over a few years the school district takes in 300 additional students.

The school district's ledger.

• Cost: 300 students at an operating cost of $12,000 each is 300 × $12,000 = $3,600,000.
• State aid: $6,000 per pupil, so 300 × $6,000 = $1,800,000.
• Local property tax from the plant: say the plant pays $900,000 a year in property tax, and 60 percent of the property tax goes to the schools. 60 percent of $900,000 is $540,000.
• Local property tax from the new households: 150 households, each paying $1,200 a year in property tax (directly if they own, or through the rent they pay if they do not), with 60 percent going to schools. 150 × $1,200 = $180,000, and 60 percent of that is $108,000.
• Total revenue: $1,800,000 + $540,000 + $108,000 = $2,448,000.
• The gap: $3,600,000 − $2,448,000 = $1,152,000. Divided by 300 students, that is $3,840 per student.

The honest read. On the school district's books, the arrival of 300 children opens a gap of $1,152,000, or $3,840 per child. The plant would have paid its property tax whether or not the new children came, but without its workforce the plant would not exist, so I have counted its tax in the ledger and I want you to see that choice. A skeptic could say the plant's tax should not be credited to immigration. A defender could say it should be. Reasonable people will argue about that line, and the point of showing it is that you should always ask where the line is drawn when someone gives you a number.

The employer's side. The plant gets its workers, the town gets a payroll that circulates through the local grocery store and gas station, and the community gets a reason to exist. Those benefits are real, and they do not show up on the school ledger. A conservative who cares about the family-owned businesses on Main Street should say so in the same breath as the gap.

The fix is not to pretend the gap is zero. It is to ask whether the state formula recognizes that the district is growing, and whether the plant, which is the direct beneficiary, should contribute through a local arrangement. Those are questions for the school board and the county, and a citizen can ask them. See How to Attend a School Board Meeting and Make Your Three Minutes Count.

Town 2: Rio Seco County, the border county

A hypothetical. Rio Seco County sits on the border. It has a county jail, a county hospital district and a small sales tax. Its costs fall on two budgets, the sheriff's and the hospital's.

The jail. Suppose immigration-related bookings add an average of 40 people to the jail population every day. A jail bed costs the county $90 a day.

• 40 people × $90 a day = $3,600 a day.
• $3,600 × 365 days = $1,314,000 a year.
• The federal government has a program, the State Criminal Alien Assistance Program, created in the 1994 crime law, that reimburses states and localities for part of the cost of jailing certain criminal aliens. Say the county receives a reimbursement equal to 25 percent. 25 percent of $1,314,000 is $328,500.
• Net cost to the county: $1,314,000 − $328,500 = $985,500.

The hospital district. Suppose the hospital district provides 2,000 emergency visits a year to people who cannot pay, at an average cost of $1,100 per visit.

• 2,000 × $1,100 = $2,200,000.
• Emergency Medicaid covers 40 percent of that. 40 percent of $2,200,000 is $880,000.
• The unpaid balance, absorbed by the district: $2,200,000 − $880,000 = $1,320,000.

The county's revenue. Suppose 3,000 immigrant households live in the county, and each spends $18,000 a year on items subject to the county's 1.5 percent sales tax.

• 3,000 × $18,000 = $54,000,000 in taxable spending.
• 1.5 percent of $54,000,000 is $810,000.

The total. Costs of $985,500 (jail) plus $1,320,000 (hospital) come to $2,305,500. Revenue is $810,000. The gap is $2,305,500 − $810,000 = $1,495,500.

The honest read. In this county the gap is large, and it is carried by the two local governments least able to carry it. The benefits in this town are real but they scatter. The ranches and packing sheds get workers. The trucking companies get cargo. The federal Treasury gets the payroll taxes from those who work on the books. None of that arrives in the county's account. Meanwhile, the county has no vote on federal immigration policy but pays for its consequences.

That mismatch is the strongest argument a border-county official has, and it is why conservatives who take federalism seriously should be asking for fair reimbursement from the federal government for the duties the federal government imposes. EMTALA is an unfunded mandate in everything but name, and SCAAP reimburses only part of the cost. If you believe the national government sets the immigration policy, you should believe the national government pays the bill.

I should add that border counties also receive federal grant money for law enforcement in some programs, and I have not tried to count it, because the programs change. Check your own county's budget for the real figures.

Town 3: Elm Hollow, the college suburb

A hypothetical. Elm Hollow is a suburb of a university. Its immigrants are mostly skilled workers and international graduate students. About 200 skilled-worker households have settled in town, many of them on temporary work visas that became permanent residence, and the university has 1,500 international graduate students who rent apartments in and around town.

The school district's ledger. Suppose the 200 households have 200 school-age children in total, and each child costs $12,000.

• Cost: 200 × $12,000 = $2,400,000.
• State aid: 200 × $6,000 = $1,200,000.
• Local property tax: these households own homes and each pays $9,000 in property tax, with 60 percent going to the schools. 60 percent of $9,000 is $5,400, and 200 × $5,400 = $1,080,000.
• Total revenue: $1,200,000 + $1,080,000 = $2,280,000.
• The gap: $2,400,000 − $2,280,000 = $120,000, which is $600 per child.

The city's ledger. Suppose the city has a 1 percent sales tax.

• The 200 households spend $30,000 each on taxable items: 200 × $30,000 = $6,000,000, and 1 percent is $60,000.
• The 1,500 graduate students spend $8,000 each on taxable items: 1,500 × $8,000 = $12,000,000, and 1 percent is $120,000.
• Total city sales tax: $60,000 + $120,000 = $180,000.

The honest read. The schools are $120,000 short, which is small for a district. The city collects $180,000 in new sales tax. If you could add the two budgets together, you would be ahead by $60,000, but you cannot add them, because a school board cannot spend the city's surplus. What this town shows is that the arithmetic changes when the newcomers are older, better educated and higher earning, the point the National Academies made about the importance of who comes. It also shows a different kind of benefit: the university and the employers that hire skilled workers are the town's economic engine. The work visas that bring those workers are explained in H-1B, H-2A and H-2B, What Each Work Visa Does and Who Can Use It.

What the three towns teach

Lay the three ledgers side by side and a few lessons come out.

1. The same national policy produces three different local results. In Packer Falls, the gap is on the school budget. In Rio Seco, the gap is on the jail and the hospital. In Elm Hollow, the books nearly balance.
2. The size of the gap depends on who comes. Age, income, family size and legal status all move the numbers. That is the same lesson as in "Immigration Always Helps the Economy" Is Only Half True.
3. The benefits and costs land on different checkbooks. Employers and the federal Treasury get most of the benefits. State and local governments get the first-year costs. A fair debate says which budget is being talked about.
4. A reimbursement fight is a federalism fight. When Washington sets the rules, as it does for EMTALA and for border policy, conservatives who believe in limited, accountable government should ask Washington to pay for what it requires.
5. Plugging in your own numbers beats arguing about someone else's. Your district's budget, your county's jail census and your hospital's uncompensated care are all public documents.

The best objection

The opposing view, stated fairly, is that this kind of local accounting is too narrow. It counts the child's school cost but not the lifetime of taxes the child will pay. It counts the emergency room bill but not the workers who staff the nursing homes. A budget is a snapshot, and immigration is a long story. That is a good point and it is why I included the second-generation finding in the companion post.

The answer is that both statements are true, and a serious person keeps them both. The long-run story matters to the country. The annual ledger matters to the board that has to balance it by June. A politician who talks only about the long run is dodging the budget, and a politician who talks only about the annual cost is ignoring the future. You are allowed to demand that they do both.

The bottom line

• Immigration lands on a school board, a county jail and a hospital district, and the benefits often land somewhere else, with employers and the federal Treasury.
• Plyler v. Doe (1982) requires public schools to enroll children regardless of status, and EMTALA (1986) requires emergency care for all. Neither came with a check attached.
• In the three hypothetical towns, the gaps were $1,152,000 for a school district in Packer Falls, $1,495,500 for the jail and hospital in Rio Seco, and $120,000 for the schools in Elm Hollow. Those numbers are invented. The point is the method.
• Ask for your own numbers: the district budget, the jail census and the hospital's uncompensated care. They are public.
• If Washington sets the rule, argue that Washington should help pay, and say so at your next county meeting.