Communities of color face a variety of deeply-rooted racial issues: the wealth gap, discrimination and a funding gap to name a few. Due to these issues, people of color typically have to work harder and pay more to earn similar benefits, wealth and opportunities compared to their white counterparts. In the Black community, this phenomenon is known as the “Black tax.”
Municipal bonds, also known as “munis,” are loans that are used by states and cities to fund building or repair projects such as schools, roadwork or sewer repairs. The study found that communities with a high concentration of Black Americans, such as Southern communities like Memphis, pay higher interest rates for projects funded by bonds since the residents are primarily Black.
To put it into perspective, the study estimates that some communities such as Shelby County, which funds the Memphis school system, is paying $5 million more per year due to its Black residents. Another study found that each percentage increase in a community’s Black population boosted its chances of getting a low bond rating between 1 and 1.5 percentage points.
These gaps have damaging impacts on these communities, especially on the quality of education students receive. In Memphis, some schools are close to 100 years old and lack the funding they need to make repairs. For example, some lack essentials like air conditioning, locks, intercoms and outdoor lighting. While other schools need funds for major repairs for water leaks, roof repairs and sewage.
Over the last few years throughout the pandemic, the achievement gap increased by three months. This puts Black students behind by an entire year compared to their white counterparts.
In 2021, Smith partnered with Vista and PowerSchool to fulfill over 1,800 teacher funding requests for classroom supplies through DonorsChoose. The $1.25 million donation covered the supply requests from more than 1,300 teachers at 670+ predominantly Black schools in six Southern U.S. communities.