Special Report
Law & Courts

States Squeezed by Fiscal, Political Pressures on Funding

By Daarel Burnette II — June 06, 2018 5 min read
Judy Wai is a counselor at Audubon Elementary School in Foster City, Calif. The San Mateo-Foster City district used its local flexibility under the state’s funding formula to funnel resources into additional counselors and other priorities identified by the community.

No matter how much they need, schools can only spend what they have—and that finite pot of money depends on broader economic and political factors largely beyond their control.

So when it comes to spreading nearly $648.6 billion in state, local, and federal education aid across the national landscape, there are bound to be big holes in the funding bucket, even in a generally resurgent economy.

And the pictures that emerge from disparate spending decisions by states and districts can be striking: students shivering in poorly heated classrooms or sweltering without air conditioning; viral posts of taped-up textbooks, outdated computers, and overcrowded classrooms; teachers striking and rallying in multiple states under the banner of higher pay and additional school funding.

The nation as a whole earns a nearly failing D-minus grade on school spending from the Education Week Research Center in the Quality Counts 2018 school finance report, based on several indicators that include per-pupil spending and the proportion of taxable resources they devote to K-12 education.

That’s despite the fact that spending on schools nationally increased 3.3 percent from fiscal 2014 to fiscal 2015, according to the most recent federal figures.

While some states, such as New York, North Dakota, and Wyoming have prospered, others such as Kentucky, Oklahoma, and West Virginia have been slow to recover from the Great Recession, a picture complicated by skyrocketing pension and health-care expenses, costs associated with ramped up state and federal accountability requirements, and the impact of rapidly shifting demographics.

And with voters increasingly hostile toward new taxes, policymakers can end up struggling to find new revenue sources or replace outdated school funding formulas, prompting legal disputes and legislative logjams.

In one such long-running battle, leaders in Kansas await a state supreme court ruling that could shut down its entire school system after the Republican-controlled legislature promised $500 million more toward its public schools over the next five years—$1.5 billion less than what plaintiffs say is necessary for students to meet constitutional standards.

That’s infuriated the state’s fiscally conservative Republicans who have argued districts waste money and the court has overstepped its bounds.

But in Minnesota, Democratic Gov. Mark Dayton late last month vetoed the GOP-dominated legislature’s budget because, he said, it failed to rescue some of the state’s largest school districts from years of shortfalls.

These funding wars in many states have spilled over into this fall’s midterm elections in which more than two-thirds of state legislative seats and 36 governorships—those positions with the most say over school spending—are up for election. More than 100 teachers have filed to run for state office in Arizona, Kentucky, and Oklahoma after they failed to get all they demanded from their strikes and protests.

Overall State Grades

Catch up on how the nation and states fared on a broad range of K-12 categories, including school finance, as reported in this year’s first installment of Quality Counts, published Jan. 17.

And Democratic leaders in Congress say that if they regain control this fall, they’ll seek to invest more than $100 billion in the next 10 years to give the nation’s teaching force a pay raise and shore up America’s dilapidated school infrastructure.

Recognizing a Shortfall

That’s not to say that states are uniformly reluctant to spend more money on schools.

According to a recently released study by the Center on Budget and Policy Priorities, a think tank that focuses on reducing fiscal inequality, more than half of states today pay more toward public education than they did before the recession, which officially ended in 2009.

California, for example, has added more than $25 billion toward public education since 2011 and is considering a bill that would add another $35 billion by 2025. It plans to spend a total of $74.5 billion this school year.

At the same time, more than half the nation’s taxpayers think their taxes are too high, according to a 2014 Pew Research center poll. In states like Kentucky and Texas, Republicans, who control most of America’s statehouses, have run on campaigns to slash taxes to their lowest rates possible.

Student-population centers also have shifted dramatically, including depopulation in the Midwest and Northeast and overcrowding in the South and Southwest.

The fiscal impact of such population shifts can be dramatic either way.

Vermont, which spent an average of $20,795 per student in 2015 on a regionally adjusted basis—the highest in the nation that year, according to Quality Counts data—has lost a tenth of its student body in the past decade alone, resulting in plummeting revenue for many districts and hollowed-out classrooms.

The state, using a carrot-and-stick approach, has recently consolidated more than 151 of its many tiny districts into just 38. Vermont raises taxes on districts that don’t consolidate and lowers them for districts that manage to.

In Arizona, where the student population has doubled over the past 20 years, teachers have long complained about overcrowded classrooms, dilapidated school buildings, and low pay.

State Rep. John Kavanagh, the Republican chairman of the House appropriations committee, said Arizona’s economy has been slow to improve, and the legislature, in response, has attempted to cut taxes to spur it along.

In 2016 alone, the state allowed $13.7 billion to go uncollected through a series of income, sales, and other tax exemptions, deductions, allowances, exclusions, or credits, according to the state’s department of revenue.

“We just don’t have the money,” Kavanagh said in response to teachers’ demands for pay raises. “Arizona was especially hurt by the Great Recession, and the recovery has been extremely slow. We cut all levels of spending, and we need to restore all levels of spending. We’ve given priority to K-12.”

For other states, pension benefits, handed out to teachers and other public employees generously throughout the 1990s, have spiraled, amounting to a debt of $516 billion combined.

Attempts to make changes to either the benefits retired teachers receive or the contributions new teachers must make can end careers.

In Kentucky, for example, high school math teacher Travis Brenda, last month ousted Republican Jonathan Shell, the state’s House leader who co-wrote and rushed through a bill that made several changes to that state’s pension system.

“They picked on the wrong group,” Brenda told reporters shortly after the primaries. “Not just the educators, but all state employees are rising up, and we’re not going to be let things be done to us.”

A version of this article appeared in the June 06, 2018 edition of Education Week as States Squeezed by Fiscal Pressures, Political Rifts in Financing Education

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