States' Budgets on the Rise

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St. Louis

Thanks to a robust U.S. economy, state spending on K-12 and higher education will climb about 5 percent in fiscal 1997, despite a second consecutive year of overall tax reductions.

The rosy fiscal picture also helped states end fiscal 1996 with an average general-fund surplus of 5.8 percent. That is the highest since 1990, according to the National Conference of State Legislatures, which released the data last week at its annual meeting here.

Nationwide, state spending from general-fund budgets on K-12 education will rise 5 percent over fiscal 1996. Double-digit increases were reported in five of the 47 states that responded to the group's survey.

"I won't make predictions, but 5 percent is possibly sustainable growth," said Arturo Perez, a fiscal-policy specialist for the NCSL. "What drives spending will be the health of the economy. That's the more important question."

Some of the biggest hikes were in states that adjusted their funding formulas to take on a larger share of school spending. They included Wisconsin, 31.7 percent; Iowa, 15.3 percent; and South Dakota, 15.3 percent.

Nevada and Virginia will spend 18.3 percent and 10 percent more, respectively, on K-12 education, owing to class-size reductions, salary increases, and technology-related purchases.

Seven states will decrease K-12 spending from general funds. They include Minnesota and Pennsylvania, which will spend slightly less because of one-time outlays in 1996.

Other decreases are due to states' shifting K-12 expenditures from general-fund revenues to earmarked funds.

Higher education will see a 5.1 percent spending increase nationwide in the new fiscal year over 1996.

"Higher education, by far, had a makeup year," Mr. Perez said. "Since 1990, if states were looking for money, they took it out of higher education."

Decrease in AFDC

Another significant shift in state spending was a net 7.5 percent decrease in funding for Aid to Families with Dependent Children, the chief welfare program for poor families. The overall healthy economy, coupled with welfare reform, contributed to the second consecutive year for decreases in AFDC, the report says.

The fastest-growing area of state spending was corrections, where prison construction and staff salaries helped drive a 6.8 percent jump in appropriations. And with current get-tough attitudes toward crime, the trend is likely to continue.

In Oregon, for example, new minimum-sentencing laws and job training for inmates forced corrections costs to balloon by 21.9 percent, while the state's K-12 spending from general funds fell slightly.

Construction and staff salaries pushed corrections costs up by 19 percent in Missouri and 17.2 percent in Oklahoma. Five states reporting decreases included corrections in overall state spending reductions.

"I'm glad we put a lot of money into education over the last four years, or we'd really be hurting," said Rep. Stephen M. Stoll of Missouri, the Democratic vice chairman of the state legislature's education committee.

Vol. 15, Issue 41

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