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
Times are tight for school budgets, which is one reason Fordham and others have dedicated new attention and energy to doing more with less. Being conscious of cost-effectiveness is about more than pinching pennies, however; it also enables schools to get the very best quality for the dollars they spend on services.
Nathan Levenson, managing director of the District Management Council and a former district superintendent in Massachusetts, highlights this in an interview today with StudentsFirst, talking specifically about special education and early intervention:
I like to simplify this topic, and assert that only three things really matter in early intervention -- reading, reading, and reading. The stats are clear -- reading is the gateway to all other learning. Children who struggle in reading are over-referred to special education and often never catch up. This is especially sad, since we have "cracked the code" on how to teach reading. The National Reading Panel and the What Works Clearing House spell it out. Some districts feel they don't have enough money to implement a best practice reading program, but our studies have shown that typically it costs 1/2 to 1/5 as much as the current mish-mash of elementary support programs. The obstacles aren't dollars, but focus, turf battles, silos, and other organizational self-imposed barriers.
The mentality that schools don't have enough resources ? despite marked increases in per-pupil spending over decades ? can lead to blaming every failure in education on a
Only halfway through 2011, a number of states have reformed their laws governing public sector workers' benefits, a few of them in dramatic fashion. The need to close the yawning gap between promises made to workers and the dollars saved for them on states' balances sheets is evident. According to a recent analysis, the average household will have to pay $1,398 in additional taxes every year for the next 30 years to fund retiree benefits, with New Jersey taxpayers on the hook for $2,475 per year per household before that state's recent reforms.?Even more optimistic commentators recognize that the funding ratios reported by states themselves rely on rosy assumptions about investment returns that are not likely to be borne out in reality.?Consequently, states have begun to adjust contribution rates, close loopholes, and otherwise modify pension and retiree healthcare benefits.
It is worth noting that most of these reforms leave public-sector workers, especially those newly-hired, worse off. In many states, this is a necessary evil, with budgets straining and taxes being ratcheted ever higher. Some states have done better than others in making fundamental reforms to address the sustainability of workers' benefits without soaking new workers or taxpayers, however. Here are our best and worst of the year so far, recognizing that actions in New York and Connecticut are still pending. Thanks to our indefatigable research intern, Josh Pierson, for digging up some of the details on states' reforms.
South Carolina is in hot water with the Education Department over the state's failure to meet federal maintenance of effort requirements for special education spending. ED is threatening to dock South Carolina $111 million in federal aid after rejecting a waiver request. The Palmetto State has cut SPED support for three years running due to budgetary pressure.
Federal mandates are coming under attack across the board, often for good reason. Idaho has announced it will refuse to comply with NCLB ? not ask for a waiver ? while the Council of Chief State School Officers is planning to blitz Arne Duncan with waiver requests. In South Carolina's case, however, lawmakers felt they couldn't continue to privilege special education students over every other recipient of state dollars. The state could, of course, have made its case more compelling by matching spending cuts with an agenda of effectiveness in education services, possibly?following Massachusetts' example of outsourcing services to more cost-conscious providers.
The federal response ? that states should allow special education spending to balloon in a time of fiscal austerity when everyone else in the school system is pressured to be more efficient ? is senseless. Washington's mindless maintenance of effort rules simply distort local budgets in favor of certain groups of students, regardless of local needs or resource constraints. As a result, ED is inserting its own judgment into the South Carolina budget process, which it has no business doing.
- Stretching the School Dollar
- Common Core Watch
- Ohio Gadfly Daily
- Board's Eye View
- Choice Words
About the Editor
Bernard Lee Schwartz Policy Fellow
Chris Tessone was a Bernard Lee Schwartz Policy Fellow and the Director of Finance of the Thomas B. Fordham Institute. He has strong interests in governance and education finance, especially teacher compensation and school facilities finance.