Published Online: March 1, 2005
Published in Print: March 2, 2005, as State Budgets Feel Pressure on Many Fronts

Reporter's Notebook

State Budgets Feel Pressure on Many Fronts

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While increases in revenues have helped most states recover from recent budget deficits, the costs for education and health care are paving the way to more severe, long-term shortages in the future.

That was the sobering assessment of state economies by analysts gathered here Feb. 18-20 for the National Conference of State Legislatures’ annual school finance seminar.

Demands for K-12 education and health-care funding are growing at rates that states cannot sustain, and meeting those demands is eating up all of the increased revenues states have seen in recent months, the analysts said.

A state survey released this winter by the NCSL showed that 26 states reported K-12 spending as a top fiscal issue. Thirty states also reported Medicaid and other health-care spending, and 23 reported overall state budgets, as top issues.

“The long-term state-spending outlook is quite bleak,” said Ron Snell, the director of economic, fiscal, and human resources for the Denver-based NCSL.

Some states, such as Nevada, are reporting fiscal strains caused by large increases in their populations of school-age children, while others cite heightened academic-accountability demands and a lack of enough federal aid as their top funding challenges.

In addition to education and health care, state budgets are feeling numerous other pressures, including pent-up spending needs for programs such as higher education and human services that have seen cuts or have been flat-funded for several years.

But state funding in all areas, including education, is likely to be hurt by reductions in federal funding for domestic programs in favor of tax cuts and more military and international spending, the analysts said.

“You’ve got this really, really, really serious situation,” said Scott Pattison, the executive director of the National Association of State Budget Officers, based in Washington. “All of these things coming together tell us that there are going to be very difficult times on state budgets for years to come.”

After several years of seeing cuts to higher education budgets in many states, legislators are growing increasingly concerned about issues of college access.

Because of those worries, the NCSL is forming a 10-state task force of legislators to study ways to better fund and stabilize higher education budgets. The bipartisan commission will meet for one year and then make recommendations.

Julie Davis Bell, the education program director for the NCSL, said that the school-finance conference has traditionally focused on K-12 funding, but that, because of the growing interest in college issues, this year offered more higher education sessions for the approximately 100 seminar attendees.

“The issues of rising costs and access are definitely increasing [legislators’] roles in higher education policy,” Ms. Bell said. “We really hope we can get them to look at different ways to make higher education funding more stable.”

The importance of higher education was stressed further by keynote speaker Anthony Carnavale, a senior fellow with the National Center on Education and the Economy, a Washington research group, who pointed out that a higher education is becoming increasingly critical to achieving a middle-class lifestyle.

The “great sorting in America” between classes occurs between high school and college, Mr. Carnavale said. “The sorting is accelerating, at an accelerating rate.”

Experts here also addressed the other end of the education spectrum.

As states move to establish prekindergarten programs, they have overlooked the need for full-day kindergarten. Now, some states have a “kindergarten gap,” meaning that children attend full-day preschool classes but their districts offer only half-day kindergarten programs, said Kristie Kauerz, the program director for early learning for the Denver-based Education Commission of the States.

Moreover, there are wide discrepancies in what states consider to be full-day kindergarten, and only two states—Louisiana and West Virginia—actually require all districts to offer full-day kindergarten, Ms. Kauerz said.

Many states that she surveyed for a recent report did not even have complete data on what types of kindergarten programs districts offered, she said. She urged the legislators attending the meeting to push measures that would mandate full-day kindergarten or offer financial incentives to districts to provide it.

Vol. 24, Issue 25, Page 17

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