Don't break out the champagne yet

Chris Tessone / July 14, 2011

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 expensive fringe benefits that are mostly out of sync with what high-performing young workers expect. School boards and state legislatures will have to implement more sweeping changes to get increased bang for the buck.

? Chris Tessone

School Finance