State budgets are the healthiest they’ve been since 2000, partly because of improved tax revenues, but also because legislators are showing more discipline in targeting spending toward their biggest priorities, according to a survey released this month at the annual meeting of the National Conference of State Legislatures.
The 46 states that responded to the survey ended the 2005 fiscal year with an aggregate balance of $35.7 billion—which is 7 percent of their budgets. No state surveyed ended with a deficit, although Arkansas expected to end the fiscal year with a zero balance.
State revenues were 6.8 percent higher than in fiscal 2004, and rainy-day fund balances increased 14 percent to more than $20 billion compared with fiscal 2004. The states that had not passed budgets in time for the report were Alabama, Michigan, North Carolina, and Oregon.
That surplus, however, could slip in the coming years because of spending increases on Medicaid and education programs, the report says.
“While we’ve turned the corner on this budget crisis, it’s only a recent development at this point, so we’re still feeling the effects and will for a while,” NCSL President John A. Hurson, a Democratic delegate in the Maryland legislature, said in a press release.
The conference, which drew roughly 7,000 state legislators, legislative staff members, policy experts, and advocates, was held here Aug. 16-20 at the Washington State Convention and Trade Center.
So far, the survey shows, states have budgeted 6 percent more in fiscal 2006 for K-12 education and 5.7 percent more for higher education than they did in fiscal 2005.
Some state leaders might be planning to use those additional revenues to revamp the way they pay teachers.
In a session here devoted to trends in teacher compensation, Eric Hirsch, the vice president for policy and partnerships at the Southeast Center for Teaching Quality in Chapel Hill, N.C., said that nine governors talked about new models for teacher compensation in their State of the State Addresses this year.
Arizona, Minnesota, and Florida, Mr. Hirsch said, have already initiated new programs—mostly in hard-to-staff schools—and several school districts have moved out in front of their states to get something in place.
There is wide agreement, Mr. Hirsch said, that the “single-salary schedule,” which was designed to bring about equity among teachers, is no longer sufficient to meet the goal of having a highly qualified teacher in every classroom and to reward and retain accomplished teachers.
“The whole point of paying teachers differently should be to get teachers to do things differently so it will help kids,” Mr. Hirsch said.
He added, though, that there are some important things for legislators to consider as they design these programs.
Salary alone, he said, is not enough to attract and keep qualified teachers. Non-financial incentives should also be built into these plans.
“Teachers are savvy consumers of school conditions,” he said, adding that officials also need to think about including mentoring programs, planning time, and other features that help improve teachers’ performance.
School districts also need flexibility within these performance-pay systems because of their different needs, he said.
He also cautioned state leaders against taking a “heavy-handed,” top-down approach. “Teachers need to buy into the system,” he said. “They need to own it.”
Policymakers, he added, also need to make sure that they are prepared to spend enough to pay for the program. “You better budget so that every teacher can get it,” referring to the salary increases and bonuses. “And you have to ensure that no teacher loses dollars in the transition.”
Finally, Mr. Hirsch addressed one of the biggest questions from officials and lawmakers about these initiatives—whether new salary systems can be based on student test scores.
“Virtually no state,” he said, has the ability to use what has become known as the “value-added” factor in calculating teacher pay because of uncertainty over the reliability of test scores.
One pay model, he noted, requires teachers to set personal goals and to show that they’ve reached them.