School Finance

The latest Education Next poll results are packed-full of interesting findings on topics ranging from choice to merit pay, from NCLB to tenure reform. But particularly timely, in this era of fiscal austerity, are new insights about the public's views on school budgets. And guess what: On education, like everything else, Americans don't want to make tough choices. They want to keep taxes low while boosting school spending. Sound familiar?

Let's start with taxes. Question 25a asked: ?Do you think that local taxes to fund public schools around the nation should increase, decrease, or stay about the same?? Sixty-five percent of the public wanted taxes to remain steady or drop. The numbers were a little lower for African Americans, Hispanics, and parents, but not by much. (Half of teachers even expressed this view.) Interestingly, even more people (73 percent of the public) opposed raising local taxes, even if they were to be targeted to local (instead of national) schools.

OK, Americans don't want higher taxes. So they must want school spending to remain flat, right? Wrong. Question 3b queried: ?Do you think that government funding for public schools in your district should increase, decrease, or stay...

The debates surrounding Ohio’s biennial budget and other education-related legislation during the first half of 2011 were intense, and it’s no wonder. The state headed into the year facing a historic deficit, federal stimulus money was vanishing, and school districts were preparing for draconian cuts. Meanwhile, despite decades of reform efforts and increases in school funding, Ohio’s academic performance has remained largely stagnant, with barely one-third of the state’s students scoring proficient or better in either math or reading on the National Assessment of Educational Progress. Achievement gaps continued to yawn between black and white students and between disadvantaged youngsters and their better-off peers.

 Revised considerably by the General Assembly, Governor Kasich’s budget plan (House Bill 153), a 5,000-page document that both funded the Buckeye State through fiscal year 2013 and included dozens of education-policy changes, was signed into law on June 30. The Ohio House and Senate were also engaged during the spring in passing other legislation that impacts schools.

It’s time to take stock. To what extent have Ohio’s leaders met the challenges and opportunities before them in K-12 education? What needs to happen next?...

Friends don't let friends believe lazy LA Times articles about education budget cuts:

Last year, K-12 budgets were cut $1.8 billion nationwide. According to estimates by the National Assn. of State Budget Officers, cuts to K-12 for the new fiscal year may reach $2.5 billion.

"They've long since been cutting deep into the bone," said Michael Leachman of the nonpartisan Center on Budget Policies and Priorities, based in Washington.

CBPP may have an axe to grind here: they believe government costs what it costs and seem to have little interest in increasing the effectiveness of services. But it's too bad the Times didn't investigate these "historic cuts" a little more deeply.

The nation spends over $600 billion a year on K-12 education. So $4.3 billion in cumulative cuts over two years amounts to less than 1 percent of all spending. If you cut your household budget by 0.7%, would you call that "cutting deep into the bone"? No. Yet analysts and politicians are trying to sell you on the notion that schools can't absorb a 0.7% cut without getting rid of art, libraries, and thousands of teachers.

The truth is, the depth and...

We're looking at a long weekend for politicians, journalists, and finance professionals as the debt ceiling fight goes into extra innings. The House leadership has delayed a vote on the Boehner plan due to dissension in the Republican rank and file, and odds for a major deal don't look great. What are the implications for education if a deal doesn't happen?

The most immediate impact will be that the wall of money flowing on a regular basis from the feds to state and local governments may stop, since bondholders will get priority if the debt ceiling is not raised. States will have to contend with a loss of Medicare and Medicaid support, typically the largest portions of state budgets along with education. It's hard to imagine this not impacting states' education spending. Even short delays may force districts that are living "check to check" with no reserves to borrow cash. Minnesota schools have already been forced to do this by the government shutdown there.

The longer-term impact, even if a deal is reached, would come from a ratings downgrade on America's debt. Districts routinely sell bonds to finance the construction or renovation of school buildings,...

Florida deserves kudos for protecting about $55 million in funding for charter facilities in the face of budget cuts, but they're catching a lot of flak from traditional school advocates, EdWeek reports:

School district officials across Florida are bemoaning the Legislature's decision to cut traditional public schools out of?PECO?the Public Education Capital Outlay program. The state's 350 charter schools will share $55 million, while the approximately 3,000 traditional schools will go without.

"Every cent allocated for school construction went to charter schools," complained Lee Swift, a Charlotte County school board member who heads the Florida School Boards Association.

Swift said lawmakers should focus on "properly funded traditional schools" instead of pressing for more charters that drain resources from the traditional schools.

Charters are growing around the state, however, and many districts are stagnating or losing enrollment. Districts have also been flush with cash for construction in recent years even as charters have received less funding. Last year's Ball State report on charter funding inequity states that districts in Florida "encumber funds or withhold local sources from total funds available before providing charter schools with their 'fair share.'" Charters were already getting a raw...

New York City is closing down its ineffective and poorly designed merit pay system in light of a RAND report published yesterday. Mayor Bloomberg and Joel Klein made a terrible deal to get the pilot program into the city's contract with the teacher unions, giving teachers an option to retire at 55 years of age with 25 years of service instead of age 62. Gotham Schools points out that these pension costs will likely leave a much more lasting mark on NYC than the short-term program they enabled.

There's a basic lesson in financial management here for district leaders: match the time period of your liabilities to the assets or services they pay for. Don't put yourself on the hook for decades of payments in exchange for a five-year pilot.

? Chris Tessone

It's funny that Nicholas Kristof compares the education system to an escalator in his column in this weekend's New York Times. We know a great deal about broken escalators here in DC ? our subway system is full of them ? and the reason they're so often out of order has as much to do with bad management and absurd union rules as it does with resources. (Unsuck DC Metro had an illuminating post about this late last year.) As in public transit, so in public education: how we spend our education dollars is an important and widely ignored problem. Instead, we've mostly preferred in years past to hike tax rates and throw more money at the problem, to little effect.

Kristof tries to shame budget-cutting governors by comparing our education spending here to our commitment to education in Afghanistan. It's hard to imagine a worse comparison, given that Afghanistan spends about four percent of its meager budget on education, down precipitously from the level of spending in 1980. The US spends about 14 percent of every public dollar on education, and the level of spending has increased steadily for decades, even accounting for inflation....

The Rockefeller Institute has some good news to share: state tax revenue collections were up 9.3% in the first quarter of 2011, recovering nearly to the level they were at in early 2008, prior to the financial crisis. The news is not all good, however. Local tax collections are down 0.6%, meaning school districts are still going to feel the pinch when it comes to local funding. What's more, residential real estate markets in most places have not recovered ? even when they do, tax collections will lag by a few years as property values are reassessed. Even at the state level, increases in collections don't mean happy days if legislators assumed even greater increases in revenue in order to balance budgets.

Economic recovery is not likely to bring an end to the "stretching the school dollar" era. As we and others have reported, many states still have catching up to do in funding their pension promises. The rising cost of health care is also weighing on school budgets. This means that rising revenues will not necessarily find their way into new classroom programs or innovative reforms. Instead they'll be funneled to pay for increasingly...