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Published in Print: February 10, 2010, as Education's Share Falling in Some State Budgets

Education's Share of Some State Budgets Drops

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Despite an infusion of federal economic-stimulus dollars, education’s share of state spending is decreasing in some states, according to a recent analysisRequires Adobe Acrobat Reader.

The Center on Reinventing Public Education at the University of Washington found a decline in education’s share of the pie in 13 of the 23 state budget plans it examined.

Policymakers at the state and federal levels may want to take a closer look at how money is being spent, and whether it is matching their desired outcomes, said Marguerite G. Roza, the study’s author. She is a senior fellow with the center and a research associate professor at the Seattle-based university.

Once states have reduced the share of funding earmarked for education, she said, they may find it difficult to increase it to previous or higher levels during budget battles in the coming years.

“The trends reported here provide an early-warning signal on an issue that may ultimately lurk just around the corner,” the analysis says.

The brief is the sixth in an ongoing series of “rapid-response papers” the center is writing to examine the impact of the recession on education. The analysis is designed to give timely information that can help states think more carefully about their budgets being drafted under changing economic conditions.

“We wanted to say to states, ‘Is this your plan? Because this is what you are doing,’” she said.

States are slated to receive a total of $48.6 billion from the State Fiscal Stabilization Fund, a part of the American Recovery and Reinvestment Act passed a year ago. The money was expected to help states preserve education jobs and promote school improvement, although studies by organizations including the American Association of School Administrators and the congressional Government Accountability Office have found that states used it mostly to plug budget holes.

The rules of the stabilization fund allow states to count the money as nonfederal dollars and incorporate it into their education finance formulas, the study notes. Most laws governing federal money do not allow such arrangements.

But growth or decline in education’s share of the budget does not necessarily mean a commensurate increase or reduction in the amount spent, Ms. Roza said.

One question that remains unanswered is the extent to which the stimulus funding allowed states to disproportionately cut education funding. The analysis, co-written by University of Washington graduate student Susan Funk, found no direct linkage.

In Missouri, for example, K-12 education funding went from 41 percent of the budget to 35.9 percent, even as the state received the fiscal-stabilization funding, the study found.

Meanwhile, education’s share of the state budget grew in Louisiana and New Jersey by more than 2 percentage points, according to the analysis, which is based on data gathered from August to October.

The paper is not the first to raise questions about the impact of stimulus dollars on state education funding.

‘Crisis Mode’

The stimulus law requires states to fund education at a level at least equal to fiscal 2006, but a reportRequires Adobe Acrobat Reader last fall from the U.S. Department of Education’s inspector general raised concerns that some states were not following the spirit of the law and were using the federal funding as an excuse to reduce their contributions to education. ("States Stung by Criticism on Use of Federal Aid," Oct. 21, 2009.)

After that report was released, U.S. Secretary of Education Arne Duncan issued a statement saying, “From the very beginning, we have made it clear that this education stimulus funding is intended to supplement local education dollars, not replace them,”

But David Shreve, the federal-affairs counsel for the National Conference of State Legislatures, said the decisions states have made reflect the poor economic conditions.

“We know the situation is beyond dire in a lot of states,” he said. “We know one of the major purposes of the stimulus money was to keep education’s head above water. Anything else was added on and, we think, pretty unrealistic in its expectations.”

Tracking down figures for the paper proved difficult, Ms. Roza said, because state budgets have been shifting constantly as growing deficits prompted midyear cuts in most states. Because states were allowed to count fiscal-stabilization funds as state money, it’s a much harder task to monitor how stimulus money is affecting education spending, she said.

State officials “are in crisis mode trying to prepare budgets, not sitting there thoughtfully moving money from here to here,” she said.

Vol. 29, Issue 21, Page 15

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