Federal Reserve’s Kashkari to key education policy critic: “You had done little to no work”

By Mike Kaszuba

New documents show that an acrimonious dispute has broken out involving the normally staid Federal Reserve Bank of Minneapolis.

At issue: A proposed constitutional amendment in Minnesota that calls for ensuring children have a right to a quality public education. The players: The president of the federal bank, who has taken a lead role in a state education issue, and a series of critics, including a prominent University of Minnesota law professor and racial disparities expert.

“It is clear that you had done little to no work to try to understand our proposed amendment and haven’t even read the background material we published,” Federal Reserve Bank of Minneapolis President Neel Kashkari wrote in a March 2020 letter. “Furthermore, your condescending views as to who qualifies as a constitutional scholar appear to be grounded in racism.

“Your lack of preparation, seriousness or respect for others simply does not meet the standards we expect,” Kashkari added.

The target of his letter was Myron Orfield, a 12-year Minnesota House and Senate member who is now a civil rights and civil liberties law professor at the University of Minnesota and the director of the law school’s Institute on Metropolitan Opportunity. Orfield, a constitutional law professor, has long been a high-profile proponent of affordable housing and school desegregation issues in Minnesota and elsewhere.

At the time of Kashkari’s criticisms, Orfield was also a paid advisor to the bank.

The documents obtained by Public Record Media (PRM), a non-profit based in Saint Paul, come as the Federal Reserve Bank president has joined with retired Minnesota Supreme Court Justice Alan Page in pushing for the constitutional amendment, and as supporters portray the proposal as having widespread support in the state as a way to eliminate educational achievement gaps between white and minority students. The Federal Reserve Bank serves as a “research arm” for the group lobbying for the proposal.

The documents also show that Orfield, a $10,000-a-year advisor to the Federal Reserve Bank of Minneapolis’ Opportunity and Inclusive Growth Institute, had his role cut short after he began challenging the proposed amendment. A bank official, in an e-mail to Orfield obtained by PRM, said that because of a “communication lapse” Orfield had been mistakenly sent a three-year contract to be an advisor instead of a one-year contract, and that the contracts of the advisors were changed to help stagger their terms. The one-year contract, which Orfield signed, expired at the end of 2020.

Together, Kashkari’s letter to Orfield and the ending of Orfield’s advisory role at the bank provide a look at an unusual public disagreement involving the bank.

The documents also show how far Kashkari, who heads one of 12 regional Federal Reserve Banks that shape the nation’s monetary policy, has delved into state education policy in Minnesota. The Minneapolis-based regional bank, which has more than a thousand employees, covers Montana, South Dakota, North Dakota, Minnesota and parts of both Wisconsin and Michigan.

The Federal Reserve System is an independent arm of the federal government whose board of governors supervises the regional banks and the U.S. central banking system, and is itself overseen by Congress. Its “Purposes & Functions” statement said the system, among other duties, conducts monetary policy, regulates financial institutions, promotes financial system stability and promotes consumer protection and community development.

Kashkari’s involvement with the proposed constitutional amendment has also highlighted his bank’s position on public transparency.

In a letter to PRM the Federal Reserve Bank of Minneapolis’ deputy general counsel, John Yanish, said that the bank was not subject to state and federal laws governing the release of public data, and said it would be “inappropriate” to comment further on individual advisory contracts such as the one Orfield had signed.

After disagreeing with Kashkari, Orfield said his advisory role changed

“When Neel Kashkari thought I was an expert, they paid me to advise them,” Orfield said in a January 2021 e-mail. “About two weeks after I disagreed with the amendment, I got a note from the Federal Reserve that stated due to a misunderstanding, the three-year contract I had signed was changed to a one-year contract. This was legal, but [weird]. I cannot prove any connection.”

But in challenging the proposed amendment, Orfield has taken on an initiative that has already gained momentum. At the same time, Orfield’s concerns regarding the proposal have been backed by nearly two dozen legal scholars from across the country who said that while they agreed with the goal of closing achievement gaps “the proposed amendment is unlikely to achieve this aim.”

Our Children MN, a group pushing for the amendment to be placed before voters in 2022, said its own polling shows that nearly 80 percent of Minnesotans want the state to close the achievement gap and also support the amendment. The proposal, which is awaiting state legislative approval, had a hearing before a Minnesota House committee in early March 2021.

The group is supported by a bi-partisan cross section of Minnesota’s highest-profile leaders, including Minnesota Attorney General Keith Ellison, the Minnesota Chamber of Commerce, the Shakopee Mdewakanton Sioux Community, the Minnesota Business Partnership, and various state legislators.

Michael Ciresi, a high-profile Minnesota lawyer and former DFL candidate for the U.S. Senate, serves on the Our Children MN board.

“Too often these troubling disparities are explained away by supposed personal failings of students and their families,” Brandie Burris, the first black editor of the University of Minnesota’s Minnesota Law Review, wrote in a letter to a Minnesota House committee in February 2021. “However, such an explanation fails to place responsibility where it belongs: on the long-term failure of government actors to address educational inequity within Minnesota’s public education system.”

But while the proposal has garnered supporters, it has also brought other critics in addition to Orfield.

“There is little to no evidence [that] simply amending the constitution would make a significant impact,” Yusef Mgeni, the vice president of the National Association for the Advancement of Colored People (NAACP) in Minnesota, wrote to a Minnesota House committee in March 2021. “The idea of amending the constitution is problematic because there are more reliable ways to address the achievement gaps.”

The proposed amendment has also been opposed by Education Minnesota, the state teachers’ union. In a January 2020 statement, the group said that the proposal “paves the way for taxpayer-funded vouchers for private schools” and added that conservative think tanks and advocacy groups “have advocated for similar changes to state constitutions around the country.”

Orfield’s clash with Kashkari, a former unsuccessful Republican candidate for governor in California, began early in 2020. In a March 2020 letter that was obtained by PRM, Orfield said the proposal would eliminate constitutional language requiring “general and uniform” public schools, could allow the state to “substantially increase the role of public-private educational systems” and might also permit the creation of separate-but-equal educational plans in Minnesota.

According to the letter Orfield, a former DFL state legislator, said that in a meeting with Kashkari the Federal Reserve Bank president repeatedly called Orfield’s arguments “garbage.”

Orfield also said Kashkari and the bank have rebuffed his requests for information on which “non-Federal Reserve individuals or entities [were] consulted during the development of the proposed amendment”, and for any documentation or legal analysis that was produced to support the amendment.

“Neither my Institute nor I have been able to receive a full explanation, from a legal scholar, of how the Federal Reserve envisions its proposed amendment operating in a real-world setting,” Orfield wrote to Kashkari.

“In our February 21 [2020] meeting, I was permitted little opportunity to speak,” Orfield added, “and my requests for additional documentation or information about the education clause proposal were flatly denied.”

In the letter in March 2021 to PRM, the Federal Reserve Bank’s Yanish released Kashkari’s daily calendar dating back to 2016 and said the calendars helped to show the “very wide range of individuals that were consulted as part of the development of the proposed amendment.”

In July 2020, for example, Kashkari held an hour-long video conference with Page and more than a dozen Minnesota Association of Charter Schools officials and other charter school advocates, including Beth Topoluk, the executive director of Friends of Education.

The daily calendars show, among other things, who Kashkari has been meeting with to plot strategy to try to get the Minnesota Legislature to put the amendment before voters next year.

The daily calendar for January 2021 – while not providing details – showed that Kashkari talked multiple times with Page and also spoke on Jan. 12 to Sen. Julie Rosen, a Republican who chairs the Senate Finance Committee, on several topics, including “education policy issues.”

On Jan. 25, according to Kashkari’s calendar, the Federal Reserve Bank of Minneapolis president met with Page, Sen. John Hoffman, a DFLer from suburban Champlin, and Nevada Littlewolf, the campaign manager and executive director of Our Children MN.

On Jan. 28, according to the daily calendar, Kashkari spoke to current and former Minnesota school superintendents and former state Department of Education Commissioner Bob Wedl on education policy issues.

In California governor campaign, Kashkari proposed big education changes

This is not the first time Kashkari has taken an interest in education issues.

As a candidate for governor in California, Kashkari in 2014 proposed a major education overhaul for the state. He issued a 33-page policy paper that recommended sending money directly to schools instead of school districts, scraping much of the state’s education code that governed schools and effectively allowing most schools to operate like charter schools. He also called for increased vocational education, longer school days and years and merit pay for teachers.

In California, Kashkari also called for changes to higher education, and recommended linking a portion of state funding to a campus’ performance regarding graduation and course completion rates. In addition, he proposed that the University of California and California State University systems place 20 percent of their courses online within four years.

The Los Angeles Times, in outlining Kashkari’s proposal, quoted the gubernatorial candidate as stating that “every child deserves a good education and states demand a better workforce, yet Democrats refuse to prioritize children over the interests that fund their political machines.”

In Minnesota, the proposed amendment states that “all children have a fundamental right to a quality public education that fully prepares them with the skills necessary for participation in the economy, our democracy, and society, as measured against uniform achievement standards set forth by the state.”

It would replace long-standing language in the Minnesota Constitution that states: “The stability of a republican form of government depending mainly upon the intelligence of the people, it is the duty of the legislature to establish a general and uniform system of public schools. The legislature shall make such provisions by taxation or otherwise as will secure a thorough and efficient system of public schools throughout the state.”

According to the Our Children MN website, the Federal Reserve Bank of Minneapolis – led by Kashkari — has taken a lead role in pushing the proposal. In October 2019, the bank released a 32-page report titled “A Statewide Crisis: Minnesota’s Education Achievement Gap” — a study that amendment supporters have cited to bolster their case.

The report noted that “on average, Minnesota schools do well. The state ranks relatively high on standardized tests, graduation rates, and college readiness. But hidden beneath these aggregates are huge disparities. In fact, Minnesota has some of the largest achievement gaps by race, ethnicity, and socioeconomic status in the nation.”

The report added that Minnesota had one of the worst college-readiness gaps in the nation by race and ethnicity, with only 25 percent of black students, 26 percent of Hispanic students and 28 percent of American Indian students being prepared for college. Minority students who attend college, according to the report and Our Children MN, “must take significantly more remedial courses than their peers as their starting point.”

In addition, the Federal Reserve Bank report said that the “achievement gaps have persisted for decades despite policies implemented to promote equal opportunity in education, including school choice, changes in teacher evaluation systems and compensation, and equalizing per capita funding across districts.”

But not everyone is on board with the proposal – including several high-profile scholars from across the U.S.

Legal scholars criticize amendment

In a letter to the Minnesota Legislature in February 2021, the legal scholars wrote that “the Federal Reserve proposal eliminates, in its entirety, the existing education clause in the Minnesota Constitution – a provision which dates to the document’s adoption in 1857. In doing so, it removes critically important language that has already been held by the Minnesota Supreme Court to protect students’ civil rights.”

While the proposal “appears to preserve” the fundamental right to an education, the scholars wrote that the changes “may encourage courts to measure rights through the narrow lens of tested academic achievement. The result could be to narrow existing protections.”

The letter did not specifically address why the proposal in Minnesota has drawn the signees’ attention. It was signed by 22 legal scholars, including Sheryll Cashin, a professor of law, civil rights and social justice at Georgetown University, Rucker Johnson, a professor of public policy at the University of California-Berkeley, Kristine Bowman, a law professor at Michigan State University and David Sciarra, the executive director of the Education Law Center.

In a February 2021 letter to the Minnesota Legislature, Page criticized the letter from the legal scholars, saying that “except for one individual from Minnesota, the signatories are [out-of-state] law professors who do not appear to practice law in Minnesota or routinely interpret Minnesota case law.

“Moreover, they are not Minnesota families and they do not have children enrolled in Minnesota’s public schools. Their review of our proposed amendment lacks an [in-depth] reflection of the current educational disparities in Minnesota,” the former state Supreme Court justice wrote.

The state Department of Education did not respond to inquiries from PRM regarding its stance on the amendment.

Orfield’s initial work with the bank had put him at the center of the bank’s economic equality issues. Orfield was a panelist at an October 2017 seminar spotlighting segregation and inequality, which was sponsored by the Federal Reserve Bank of Minneapolis.  He was one of four panelists who spoke on redlining, a banking industry practice of systematically denying loans or insurance to neighborhoods thought to be a poor financial risk.

When the bank sent Orfield a contract in January 2020 to continue – for one more year, not three years – his work on an advisory committee, the cover letter did not allude to Orfield’s criticism of the constitutional amendment.

“We look forward to working with you throughout this coming year!” the letter stated.