State Ed. Spending Faces Gloomy Future, Report Warns
For those pondering the future of state school spending as the memory of the Great Recession recedes, a new report with some heavy-hitting names attached warns that many of the portents appear gloomy, especially when other funding obligations for health care and retirement are considered.
Some of the pessimism is captured in the name of the group itself, the State Budget Crisis Task Force, which includes as its chairman Paul Volcker, former chairman of the U.S. Federal Reserve; George Shultz, former U.S. secretary of state under President Ronald Reagan; and Alice Rivlin, who served on the President's Debt Commission and was the founding director of the Congressional Budget Office.
In tackling a variety of fiscal policy issues, the report's introductory letter states that the "storm warnings are very serious" and urges significant action to head off long-term problems. Going straight for the big fish in terms of population, the report looks at the financial health and prospects of six states with relatively large populations: California, Illinois, New Jersey, New York, Texas, and Virginia.
Let's get down to the sections dealing with education.
The report fastens on the pressure that increasing pre-K-12 enrollment will put on state budgets, saying that U.S. enrollment in public schools is projected to increase by 6.9 percent from 2009 to 2021. All but one of the six states studied (New York) are expected to have more public school students by 2021, with Texas' enrollment projected to jump nearly 25 percent by that time.
The task force also emphasizes that property tax revenues and property tax increases, traditionally relied upon to to fund education, are increasingly being capped or otherwise limited by a number of states. Per student revenue in the six states, from 1999 to 2009, increased anywhere between 52 percent (Texas) and 95 percent (New York). But Wisconsin is just one recent example of a state that put a priority on limiting any increase in property taxes.
While state fiscal officials expect legislators to make up cuts to state school funding as the fiscal picture improves, the report says "there is also recognition that continued growth in state Medicaid spending and increasing pressure on states to increase funding for pensions and OPEB [other post-employment benefits) may well continue to crowd out even modest growth in state K-12 education spending in the near term."
Even if states get relief on Medicaid and health care and retirement benefits, according to the authors, state lawmakers will increasingly look to pull their fiscal skins out of the fire by cutting education budgets, the report says. That's not just because of the size of education spending, but "because there is no clear, measureable relationship between levels of education spending and educational attainment." That last line may cheer conservatives and fiscal hawks, but trigger derisive laughter among other school advocates.
One other area that the report doesn't seem to mention in any particular detail is the argument that a nation with a rising poverty rate will produce more poor students who cost more to educate. Of course, as the economy improves that poverty rate could easily drop to less alarming levels.
The report also highlights the potential impact of school funding lawsuits from those seeking more cash from state coffers. There have been such lawsuits filed by education advocates and districts in 45 states in roughly the past 50 years, the report notes. They also appear, at least broadly, noticeably effective: Between 1972 and 2002, in states facing court-mandated school funding reforms, state aid to schools increased by 9.2 percent (although of course that statistic only accounts for cases where such lawsuits were successful). The crisis task force notes that in the current climate, the number of these lawsuits is on the rise.