Education Funding

States Report Fiscal Health Still Strong

By Linda Jacobson — June 20, 2006 2 min read
  • Save to favorites
  • Print

Most states continue to experience sound fiscal health, and as a result have been able to cover rising K-12 education costs, according to a report on state budgets released last week.

Prepared by the National Governors Association and the National Association of State Budget Officers—both with headquarters in Washington—the report shows that revenue growth continues to exceed projections, but it also sounds a cautious note.

“The Fiscal Survey of States, June 2006" is posted by the National Association of State Budget Officers.

“While this is positive, states realize that meeting increasing expenditure expectations with limited revenues will likely be problematic,” the report says.

Spending on elementary and secondary education continues to take up a significant portion of states’ total budgets—21.4 percent. But Medicaid’s share is more than 22 percent, and rising costs for Medicaid and other health-care purposes continue to strain state budgets, according to the report.

In fiscal 2005, Medicaid expenditures exceeded the amount budgeted in 18 states, while 15 states expect that to be the case for the current fiscal year.

“States are still trying to protect elementary and secondary education,” Raymond C. Scheppach, the executive director of the NGA, said last week during a telephone press conference.

He added, however, that because of health-care responsibilities, it’s unlikely that states will be able to maintain that same commitment to higher education.

‘Cuts Are Rare’

For fiscal 2006, state general-fund spending increased 7.6 percent over the previous year. But in fiscal 2007, which begins July 1 for most states, spending growth is expected to increase by a more modest 5.7 percent.

Revenues are also up this fiscal year, exceeding original budget projections in 37 states by an average of 3.4 percent. Corporate income taxes, for example, were 12.6 percent higher than expected, and personal income taxes were 3.5 percent higher.

“Budget cuts are rare right now,” Scott D. Pattison, the executive director of NASBO, said during the June 11 press conference at which the report was released.

State Fiscal Trends

Annual percentage increases in state budgets.

*Click image to see the full chart.

Click to enlarge: State Fiscal Trends

SOURCE: National Association of State Budget Officers

Not all states are sharing in the wave of economic recovery.

Four states—Indiana, Louisiana, New Jersey, and Rhode Island—were forced to reduce their enacted budgets by a total of more than $688 million in fiscal 2006.

Louisiana, where the current budget was cut by more than $431 million out of a budget of $18.7 billion, faced significant challenges because of Hurricane Katrina, which ravaged the Gulf Coast last August. The state laid off employees, offered early-retirement packages, and made across-the-board spending reductions to address a budget shortfall.

The other states with shortfalls froze hiring, restructured debt, and closed tax loopholes, among other tactics, to trim spending.

The survey of states, conducted from January to June of this year, noted that year-end balances for fiscal 2005 were more than $48 billion, and were expected to be just over $47 billion in fiscal 2006.

“This is another indicator that states have been very responsible, given the upward trend in revenues,” Mr. Pattison said.

Related Tags:

A version of this article appeared in the June 21, 2006 edition of Education Week as States Report Fiscal Health Still Strong

Commenting has been disabled on effective Sept. 8. Please visit our FAQ section for more details. To get in touch with us visit our contact page, follow us on social media, or submit a Letter to the Editor.


This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Teaching Webinar
6 Key Trends in Teaching and Learning
As we enter the third school year affected by the pandemic—and a return to the classroom for many—we come better prepared, but questions remain. How will the last year impact teaching and learning this school
Content provided by Instructure
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Equity & Diversity Webinar
Leadership for Racial Equity in Schools and Beyond
While the COVID-19 pandemic continues to reveal systemic racial disparities in educational opportunity, there are revelations to which we can and must respond. Through conscientious efforts, using an intentional focus on race, school leaders can
Content provided by Corwin
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Equity & Diversity Webinar
Evaluating Equity to Drive District-Wide Action this School Year
Educational leaders are charged with ensuring all students receive equitable access to a high-quality education. Yet equity is more than an action. It is a lens through which we continuously review instructional practices and student
Content provided by BetterLesson

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Education Funding Opinion Manchin Just Downsized the Dems’ Massive Education Spending Plans
Democratic Sen. Joe Manchin may have blown a gaping hole in the education community’s hopes for supersized new federal outlays.
4 min read
Image shows a multi-tailed arrow hitting the bullseye of a target.
DigitalVision Vectors/Getty
Education Funding Reported Essay Are We Asking Schools to Do Too Much?
Schools are increasingly being saddled with new responsibilities. At what point do we decide they are being overwhelmed?
5 min read
Conceptual Illustration
Pep Montserrat for Education Week
Education Funding Interactive Look Up How Much COVID Relief Aid Your School District is Getting
The federal government gave schools more than $190 billion to help them recover from the pandemic. But the money was not distributed evenly.
2 min read
Education Funding Explainer Everything You Need to Know About Schools and COVID Relief Funds
How much did your district get in pandemic emergency aid? When must the money be spent? Is there more on the way? EdWeek has the answers.
11 min read
090221 Stimulus Masks AP BS
Dezirae Espinoza wears a face mask while holding a tube of cleaning wipes as she waits to enter Garden Place Elementary School in Denver for the first day of in-class learning since the start of the pandemic.
David Zalubowski/AP