Education Funding

K-12 May Not Benefit From Brighter Fiscal Outlook

By Andrew Ujifusa — December 11, 2012 6 min read
State Sen. Trip Pittman, left, and Rep. Jay Love address students, school officials, and the news media about Alabama's education budget. The state has a surplus in its Education Trust Fund for the first time in four years.
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Despite some positive signs that could help school budgets, states are still facing a shaky financial environment as they head into the new year—a circumstance that could disappoint advocates hoping that even sluggish economic progress could give K-12 funding a boost.

Even in those states where money is being added to education budgets, officials still gun-shy about their finances are looking at more-focused increases. Higher general revenues for states may not always translate to reinvigorated budgets in general.

“It is still true that people don’t want to reinflate what they had,” said Paul Hill, the founder of the Center on Reinventing Public Education at the University of Washington in Seattle.

Too Rosy for Their Taste?

Interpretations of state revenues vary, and sometimes good news isn’t greeted with sighs of relief.

In the view of Mike Griffith, an education finance consultant for the Denver-based Education Commission of the States, the arrow is “pointing upwards” on state tax revenues, despite frequent gloomy talk about budgets. For fiscal 2014, some 35 states will have recovered to prerecession revenue levels in total dollars, he said.

“I’ve gotten in trouble at meetings, because I’ve been told I’ve been too rosy, I’m covering up what’s really happening,” he said.

Even where the funding picture has improved, major challenges remain. In California, for example, the passage of Proposition 30 by California voters on Nov. 6 of a tax increase on high earners will prevent roughly $4.8 billion in K-12 funding cuts from Democratic Gov. Jerry Brown’s budget and increase per pupil spending by $2,500 per student over the next four years, Margaret Weston, a policy fellow at the Public Policy Institute of California in San Francisco, wrote in a report last month.

“This would represent a significant increase of 37 percent from 2011-12 funding levels—but ... schools have experience large reductions since 2007-08 and have long been funded below the national average,” she wrote.

At the same time, Democrats and moderate Republicans, as well as more-conservative leaders, are using the situation to call for radical changes in the way K-12 is financed and what gets funded. (Most legislative sessions begin in January or February.)

In Mississippi, Gov. Phil Bryant has proposed sweeping changes to the state’s K-12 system through his Education Reform Agenda. They include funding increases specifically for performance-based teacher bonuses and termination of social promotion in 3rd and 7th grades, based on proficiency.

Specifically, the Republican’s budget provides $15 million more for teacher training and reading intervention related to ending social promotion. (No state dollars are specified for his teacher-bonus proposal.) Teach For America and the Mississippi Teacher Corps combined would also receive $6 million in the governor’s budget.

“All of that is more of a focused energy, and focused financial energy, to schools to try to deal with the problems we face,” said state Rep. Rita Martinson, a Republican on the House education committee. The reading-proficiency part of Mississippi’s budget would be modeled on Florida’s system, she said.

She also said officials must consider overhauling the Mississippi Adequate Education Program’s general funding formula.

From fiscal 2008 to fiscal 2013, the state cut its per-pupil spending by 12.9 percent, the Washington-based Center on Budget and Policy Priorities reported in September.

Other findings on state tax trends indicate that the dollar’s declining buying power makes revenue increases less meaningful.

The Nelson A. Rockefeller Institute of Government in Albany N.Y., noted in a May report on “Federal, State and Local Education Finances” that growth in state and local property-tax revenues crucial to K-12 funding has slowed over the past five quarters and remains below levels from previous postrecession recovery periods.

Rockefeller senior policy analyst Lucy Dadayan noted that when numbers are adjusted for inflation, in fact, only eight states are experiencing revenues that at least match their previous peak before the 2007 recession.

“In sum, while state tax revenue is recovering, it remains well below where previous trends would have suggested,” Ms. Dadayan and fellow senior policy analyst Donald Boyd wrote in “State Revenue Report” for the Rockefeller Institute.

Even where revenues are recovering, legislators say they are trying to practice more budget discipline. Alabama announced a surplus, $14.4 million, in its Education Trust Fund for school operating budgets for the first time in four years. Sen. Trip Pittman, a Republican and the chairman of the senate’s education budget committee, is subsequently exploring boosting prekindergarten funding, with increases of $5 million to $12 million under discussion, due to the belief that early education can affect student achievement throughout the K-12 system.

But for fiscal 2013, he noted, lawmakers found it helpful to rebuild the education budget starting from zero. Such exercises, brought about because of the fiscal crisis that left the Education Trust Fund with a $437 million debt to the state’s rainy day account, “really do help get a focus on being more efficient and doing better things with the dollars you do have,” he said.

‘We Do Expect Pushback’

For Oregon’s 2013-15 biennial budget, Gov. John Kitzhaber, a Democrat, is proposing an increase in the state’s K-12 funding by about 8 percent, from $5.7 billion to $6.15 billion. His education adviser, Ben Cannon, said the money would help districts recover from recent layoffs and reductions in school days.

But, simultaneously, Mr. Kitzhaber wants to pare district and state obligations on retirement costs. For example, he is proposing to restrict the 2 percent cost-of-living-adjustment for retired state employees to the first $24,000 in retirement income an individual receives. The plan would save school districts $250 million and allow the money to be spent on classroom costs.

Although the operating budgets and retirement costs occupy different places in budget books, Mr. Cannon said Mr. Kitzhaber has made the connection between the two explicit. “We do expect pushback. It’s understandable. We hope that it can remain civil, that this could be understood in the context of shoring up our retirement system … and [hiring] more teachers.”

But Mr. Kitzhaber’s proposal falls short of what the state needs by the state education department’s own reckoning, said Gail Rasmussen, the president of the 42,000-member Oregon Education Association.

Adequately funding the state’s Quality Education Model, which in 2010 increased teacher training and academic interventions, would have required $8.7 billion in the 2011-13 biennium, according to the Oregon School Boards Association. Ms. Rasmussen also said it was unclear whether the $250 million in savings for districts would translate to classrooms still feeling the impact of teacher layoffs.

“Our school districts are still dealing with crisis-level budgets,” she said.

Sequestration Looming

There is also the possibility that federal sequestration cuts, which could lead to an 8 percent drop in U.S. Department of Education funding unless lawmakers cut a different deal on deficit reduction, could have a big impact on K-12 budgets in some states. It remains a big worry for school budget officials, said John Musso, the executive director of the Association of School Business Officials International, based in Reston, Va.

A recent analysis from the American Association of School Administrators, based in Alexandria, Va., showed that federal revenues accounted for more than 15 percent of operating budgets in more than half the school districts in 15 states, including Arizona and Florida.

“A lot of what I’ve heard on the street is that this year is going to be even worse than last year,” he said.

A version of this article appeared in the December 12, 2012 edition of Education Week as Education May Not Benefit From Brighter Financial Outlook


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