Education Funding

States Seek to Boost K-12 Aid as Revenue Recovers

By Sean Cavanagh — February 21, 2012 6 min read
Library assistant Cindy Labezius replaces a book at Washington Elementary School in Lancaster, Pa. Six staff positions were cut at the school as a result of the district receiving $6 million less from the state last year. Though tax revenues have begun to recover in many states, budget analysts and school officials say districts will be feeling the effects of recession-driven cutbacks for years.

Buoyed by gradual increases in tax revenues, many states are looking to devote more money to schools in the coming year, after having held the line or made significant reductions during the Great Recession and its aftermath.

Yet even accounting for those proposed increases in spending, budget analysts and local officials predict that states and districts will be coping for years to come with the effects of deep cuts they’ve made to K-12 personnel, programs, and services.

The proposed bumps in education spending, which have been offered by Democratic and Republican governors alike, vary in size, though in many cases they are relatively modest. In fact, in some states, skeptics have argued that the increases amount to less than they seem, make too much of the new funding conditional, or will do too little to help districts that have suffered through years of cuts.

Even so, many say the budgets reflect a turnabout from the dire fiscal outlook school officials have faced in the past few years.

Over recent months, governors in California, Florida, Georgia, Michigan, New Mexico, New York, and other states have proposed K-12 spending increases, drawing mixed responses from educators—some of them grateful for new money, others critical that the money does not make up for past losses.

Education consumes a substantial portion of state budgets—typically at least one-third of general-fund spending—along with Medicaid, the state/federal health-care program for the poor, noted Scott D. Pattison, the executive director of the National Association of State Budget Officers, in Washington. Policymakers typically are loath to cut education during tough times, he said, but they tend to move relatively quickly to restore it when the economic picture brightens—more so than for other parts of the budget. That shift appears to be playing out in many states now.

“It fits the pattern,” Mr. Pattison said. “The two big kahunas are Medicaid and education. ... K-12 tends to be a favored area, and it always gets treated better than other parts of the budget.”

Plugging Gaps

State tax revenues across the country have risen for seven straight quarters, according to the Nelson A. Rockefeller Institute of Government, a research center at the University at Albany. At the same time, the strength of the recovery has varied by region. Some states, like Florida and Nevada, set back by declines in housing value and other factors, have been slower to rebound than others.

The recession officially lasted from late 2007 to mid-2009, though its shadow has lingered long after that. Rising revenues, however, have given states financial leeway that they lacked a few years ago. Overall state general-fund spending is expected to rise by 2.9 percent in fiscal 2012—which affects the current school year—according to NASBO and the National Governors Association. That contrasts sharply with fiscal 2009 and 2010, when state general-fund spending fell by 3.8 percent and 5.7 percent, respectively.

In Michigan, revenues are projected to rise by $630 million over the coming year. Gov. Rick Snyder has proposed increasing school aid by $113 million, to about $11 billion for fiscal 2013, according to his administration’s estimates, after approving cuts the year before. The Republican has tied a portion of the new aid—about $200 million—to districts improving academic performance and financial efficiency.

The governor’s budget director, John Nixon, said the proposal is meant to reward schools at the same time it requires more from them.

“Education is a big priority of ours,” he said, “but we know we need to make some other reforms to move kids along.”

Some have questioned how much new money will actually flow to schools from the governor’s plan. The former director of the legislature’s nonpartisan House Fiscal Agency, Mitch Bean, argues that proposed funding for schools will actually decline slightly, because the governor is not accounting for decreases in one-time funding, as well as supplemental spending yet to be approved by the legislature. Mr. Nixon counters that one-time spending should not be built into the base, when the obligation to taxpayers was that “we’re only going to spend it one time.”

In Florida, Republican Gov. Rick Scott has called for increasing state spending on schools by $1 billion next year, through a plan that would boost per-student funding by about 2 percent, to $6,372. That increase, being debated in the GOP-controlled legislature, would mark a reversal from last year, when the governor and lawmakers approved a spending plan that made substantial cuts to education.

Mr. Scott, elected two years ago on promises to limit government spending, told state lawmakers last month that public frustration over last year’s K-12 cuts had shaped his thinking.

“I heard one thing very clearly, over and over,” he said. “Floridians truly believe that support for education is the most significant thing we can do to ensure both short-term job growth and long-term economic prosperity for the state.”

Candace Lankford, past president of the Florida School Boards Association, said the governor’s proposal would do little to help districts that have absorbed deep reductions in personnel, services, and programs in recent years.

“We’re grateful for no further cuts,” Ms. Lankford said. “I think the governor realizes he’s taken these cuts about as far as they can go.”

Long Road Back

A number of analysts caution that states and school districts have a long way to go before they recover. Districts rely heavily on local property taxes, which were drained by the collapse of the housing market. Those losses, in turn, have made districts more reliant on state aid. In addition, states are coping with the loss of federal stimulus funding, the vast majority of which was supposed to have been spent by last fall. A separate pool of federal money, the Education Jobs Fund, must be obligated by this September.

State tax revenues grew by about 8 percent in the 12 months leading up to June 2011, according to the Center on Budget and Policy Priorities, a Washington organization that advocates for low- and middle-income Americans. Even if revenues continue to rise at that pace—unlikely, given historical growth rates—it would take states seven years to reach the point that they would have otherwise reached, had that money flow not been sapped by the recession, the center estimates.

Michigan is not the only state where governors have put conditions on districts receiving funding. In New York, Gov. Andrew Cuomo, a Democrat, has proposed requiring districts to approve new teacher-evaluation systems in order to receive 4 percent increases in state aid included in his budget, which funds K-12 at about $20 billion. Those models will have to comply with state regulations agreed to by state and teachers’ unions officials last week.

In some states, policymakers are fighting over K-12’s share of the budget. In Alabama, Gov. Robert Bentley’s proposal to shift $230 million from school funding to other parts of the budget has angered lawmakers. The Republican governor counters that his plan will protect programs in reading, math and science, prekindergarten, and other areas, without requiring a tax hike, which he says will hurt his state’s economy.

Losses of state funding have sapped school districts like Perry County’s, located about an hour south of Birmingham. The majority of the rural system’s students hail from poor backgrounds. Other than a local catfish-processing plant and farming-related industries, the 1,800-student district generates little local property-tax revenue, making it reliant on dwindling state aid, said Superintendent John H. Heard III.

The Perry County schools have been forced lay off numerous teachers, cut central-office staff; reduce bus routes, and close the system’s only alternative school. If cuts continue, class sizes will swell and teachers will struggle to help students at all academic levels, Mr. Heard predicted.

“It will make it difficult for teachers to do anything other than baby-sit,” the school official said. State cuts, he added, amount to “more than bleeding, it’s a hemorrhage.”

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A version of this article appeared in the February 22, 2012 edition of Education Week as States Seek to Increase K-12 Aid

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