Published Online: October 21, 2008
Published in Print: October 22, 2008, as Fiscal Worries Shadow State Elections

Fiscal Worries Shadow State Elections

Washington Gov. Christine Gregoire, a Democrat, and her Republican challenger, Dino Rossi, right, watch as debate moderator Enrique Cerna tosses a coin to determine the order of their opening statements for their Oct. 1 debate in Yakima, Wash. Ms. Gregoire, who narrowly defeated Mr. Rossi in the 2004 election, won the toss and elected to give her opening statement after her opponent.
—Photo by Gordon King/Yakima-Herald Republic/AP

New Governors, Legislators to Face K-12 Funding Hurdles

The new class of governors and state legislators to be elected Nov. 4 will inherit financial problems that pose both immediate and long-term threats to existing education programs, while constraining their ability to mount new initiatives.

The prospect of a deepening economic slowdown—with state-level budget deficits already totaling more than $40 billion nationwide—will hang over voters as they pick governors in 11 states and legislators in 44.

At least 12 states have made targeted cuts to education, including Delaware, which faces a $200 million deficit and where the candidates vying to replace a term-limited Democratic governor are clashing over how best to tighten the state’s budget belt.

Despite the gloomy economic forecasts across the country, most candidates for governor are still pushing ideas to improve education. Proposals include revising or scrapping standardized-testing programs, expanding financial aid for college students, and creating school choice programs.

Battleground States

Voters in 11 states will choose governors in the Nov. 4 election, and three of those gubernatorial contests—Delaware, Missouri, and North Carolina—are for open seats. In addition, 44 states will elect state legislators, including lawmakers in 10 highly competitive states where a change in one or two seats could flip partisan control of one of both legislative chambers.

Not to be overlooked are the legislative elections, in which voters nationwide will fill 80 percent of statehouse seats. Legislatures control state purse strings and help drive policy, noted Tim Storey, the elections analyst with the Denver-based National Conference of State Legislature.

“After all, who makes education policy? The education committee chairs,” said Mr. Storey, referring to the leaders of state legislative panels who often wield significant power over which policy ideas advance and which do not.

But he said the economic situation is dominating even local races. “The only real issue out there now is money,” he said. “In terms of education finance, it’s going to be, how do we pay for schools?”

Some Fresh Faces

At least three new faces will join the governors’ class of 2008. The open seats, in addition to that being vacated by Delaware Gov. Ruth Ann Minner, are in Missouri, where Republican Gov. Matt Blunt decided not to seek re-election, and in North Carolina, where Democratic Gov. Michael F. Easley is term-limited.

Democrats hold the majority of governors’ seats—28—and polls suggest they could pick up the Missouri seat. On the flip side, Washington state’s Democratic governor, Christine Gregoire, is in a tough rematch against her 2004 rival, Republican Dino Rossi, a businessman and former state senator whom she beat by fewer than 200 votes.

In Delaware, neither candidate has said much about how education funding would be affected even as they scrap over how to cope with the state’s $200 million deficit. Democrat Jack Markell favors finding efficiency in state government to plug the hole. His opponent, Republican Bill Lee, favors a zero-based approach to state agency budgeting, rather than allowing them to start from a current funding baseline.

Both major parties are duking it out in the North Carolina governor’s race, perhaps the nation’s most competitive in the final weeks before the elections. Three local polls completed this month show the candidates—Charlotte Mayor Pat McCrory, a Republican, and Lt. Gov. Beverly Perdue, a Democrat—running neck and neck, according to media reports.

Charlotte Mayor Pat McCrory is locked in a heated campaign with North Carolina Lt. Gov. Beverly Perdue, for the open governor's seat. Both have made education issues part of their campaigns.
—Photo by Gerry Broome/AP

Because that race is so tight, teachers’ union volunteers and workers from other states and the National Education Association’s main office have descended on North Carolina to help drum up support for Ms. Perdue, said Sheri Strickland, the president of the 65,000-member North Carolina Association of Educators, an NEA affiliate, which has endorsed Ms. Perdue.

North Carolina Lt. Gov. Beverly Perdue is locked in a heated campaign with Charlotte Mayor Pat McCrory, for the open governor's seat. Both have made education issues part of their campaigns.
—Photo by Gerry Broome/AP

“We’ve really ramped up our efforts. And I think the biggest effect on the campaign will be our sheer numbers,” Ms. Strickland said.

Ms. Perdue, a former teacher, wants to provide more college scholarships for low-income students, expand the state’s teaching-fellows program as a teacher-recruitment tool, and expand prekindergarten. She links her plan to the larger economic climate: “Opening the doors of educational opportunity as wide as possible is not only the morally right but also the fiscally wise thing to do,” she says in her education platform.

North Carolina isn’t in the dire budget straits of some other states; it’s not running a budget deficit, although tax revenue is coming in below expectations, and that could mean a shortfall by next June, according to news reports.

Mr. McCrory is having some success running as the “change” candidate—the Democratic incumbent has been in office for eight years—even though this seems to be a year in which Democrats nationally are successfully making that case, Ms. Strickland said.

In a July 2 press statement announcing his education plan, Mr. McCrory said: “I am running for governor to change the culture in [the state capital of] Raleigh—a culture that considers a 30 percent dropout rate acceptable.” That’s the official estimate given by the state department of education.

Mr. McCrory’s proposes letting school administrators set teacher pay according to market conditions and expanding technical and vocational education. Though vouchers are not part of his official education platform, Mr. McCrory has embraced them, although he hasn’t provided a specific plan.

Ms. Perdue is against vouchers.

School vouchers continue to be a popular topic among Republicans nationally; the GOP candidates in Delaware and Missouri have made support for them a part of their education platforms and campaign speeches. And the subject even came up last week during the final presidential debate between Sens. Barack Obama, a Democrat who opposes vouchers, and Sen. John McCain, who supports them.

But the global financial crisis and concerns about home foreclosures are squeezing the attention being paid to school choice and other education matters.

“With the exception of North Carolina, where it is a serious issue, I think the issue of school choice is getting overshadowed, and, frankly, so are a lot of other education issues,” said Robert Enlow, the executive director of the Indianapolis-based Milton and Rose D. Friedman Foundation, which promotes tuition vouchers and other forms of school choice.

Other common themes have emerged in governors’ races. Expanding college aid, especially for low-income students, is being pushed by Democrats in Delaware and Missouri, and by both candidates in Indiana. And expanding dual-enrollment programs that allow high school students to earn college credits is a priority for Democrats in Delaware, Indiana, and Missouri.

Abandoning the current state standardized-testing system is a priority for the Republican candidate in Washington and for the Democrat in Delaware.

Legislatures in Play

The number of states with legislative races, meanwhile, is four times the number filling governorships: Across the 44 states that will vote for members of the legislature, 7,382 seats are up for grabs, according to the NCSL.

Democrats have the edge going into the elections, holding 55 percent of seats; the party also controls both chambers in 14 states, compared with Republicans’ control in 10 states. The two parties split control of statehouses in 25 states, according to the NCSL. (Nebraska has a nonpartisan unicameral legislature.)

Democrats have several opportunities to build their power. Of the NCSL’s top 10 battleground states, eight feature chances for that party to flip one or two seats and take control. Montana is the most competitive: The GOP controls the House by just one seat, and the Democrats hold the Senate by only two seats.

But, as the NCSL’s elections analyst Mr. Storey points out, the 2006 elections were so successful for Democrats that they may not be able to claim many more seats.

“In terms of maximizing their control, they’re close to maxed out,” he said.

Regardless of who wins, experts predict that the newly elected, or re-elected, officials in some states and communities will face big problems from declining property-tax revenues due to home foreclosures and lower housing values.

Roughly 35 percent of K-12 school funding comes from local property taxes, according to the National Center for Education Statistics. In states and communities with limits on how much can be raised from property-tax revenues, the current situation could mean schools will have to make do with less, or seek state help.

In areas without such limits, taxpayers may be asked to pay even more to make up for the lost revenue, said Andrew Reschovsky, a professor of public affairs and applied economics at the University of Wisconsin-Madison.

“If the downturn is severe enough, will it be politically possible to even raise property taxes, or will [state officials] again go towards cutting state spending?” asked Mr. Reschovsky. I think it’s safe to say voters won’t be too willing to pay more taxes.”

Property-Tax Squeeze

Property taxes are already an issue in the pivotal races for the New York Senate, where Democrats are hoping to wrest control from Republicans, who hold a narrow, 32-30 advantage.

The state Senate has proposed placing a 4 percent cap on how much a homeowner’s property taxes could increase each year, while the state Assembly—the other chamber—has proposed a “circuit breaker” that would give a tax credit if a homeowner’s property taxes exceeded a certain percentage of his or her income.

The New York State United Teachers Association, which is affiliated with both the American Federation of Teachers and the National Education Association, opposes the property-tax cap. It would compromise the stream of such revenue to local schools, said Carl Korn, a spokesman for the 600,000-member NYSUT.

That’s especially true, he added, at a time when the state is grappling with an $8 billion deficit, which will likely be priority No. 1 for the new legislature.

Vol. 28, Issue 09, Pages 1,18-19

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