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Education Funding and the Surplus

“… the Utah Legislature refuses to funnel surplus dollars into schools”;
Salt Lake Tribune, October 12, 2006

Most Utahns read this and other newspaper reports and think that the Legislature is not increasing education spending, or at least not significantly. However, the Legislature significantly increased education funding for FY2007. While many will argue that one year of significant increases does not negate the fact that other states spend more than Utah, the fact remains that the Legislature significantly increased education spending for FY2007, but the spending lobby won’t admit it.

While education spending is increasing at a significant rate – even after the $78 million tax cut, whether or not education has received any of the “surplus” depends on your definition of surplus.

Definition #1: Surplus is any amount of revenue in excess of the previous year’s revenue.
Policy wonks and accountants may wince at this definition, but this is the definition that the media and many elected officials have used, and it’s the definition that most people in the public accept.

By this definition, legislative appropriations for education have increased substantially, although the percent increase depends on how the spending is measured.

When only state general/education fund dollars are considered, FY2007 education appropriations are 12.8% higher than FY2006’s pre-supplemental appropriations. (Supplemental appropriations are excluded from the FY2006 base year because FY2007’s supplementals won’t be known until next year.) This amount includes appropriations for state agencies that do not end up at the school district level.

When only state individual and corporate income tax revenue for the Minimum School Program is considered, FY2007 education appropriations are 12.4% higher than FY2006's pre-supplemental appropriation.

When total state, federal and basic/voted/board/K-3 local sources are considered, FY2007 education appropriations are 11.3% higher than FY2006’s pre-supplemental appropriations. This amount includes appropriations for state education agencies that do not necessarily end up at the district level as well as school lunch expenditures that do not show up in per student operations spending amounts.

FY2007 spending per student won’t be officially released for another year. However, assuming the following realistic increases:

  • State income tax revenues for K-12 operations (including supplementals but excluding $37.3 million for school building program) increase 12%
  • Property tax and other local operations revenues increase 5.5%
  • Federal revenues increase 6.0%
  • The split between state, local, and federal sources is 68% - 23% - 9% (the state portion may actually be higher because the state increase is much higher than the local and federal)
  • Enrollment increases 2.8%

then total per student spending will increase by roughly 7%, which is substantial. We wouldn’t be surprised if the actual increase approaches 8%.

Definition #2: Surplus is any amount of revenue in excess of projected revenues for that year.
Policy wonks are more comfortable with this definition, and by this definition education did not receive a lot of the surplus. However, this is a moot point. Most state-level education appropriations are ongoing, but year-end budget surpluses are one-time dollars. Budgeting one-time revenues for ongoing appropriations is a big no-no. Moreover, one-time school district appropriations – like building a new school – are typically handled at the local level. In FY2005, state funding covered 6.3% of school district capital. The rest was covered by local property taxes. The state does spend some money for school district capital projects, but that amount ($37.3 million in FY2007) has never been a large amount compared to what districts spend using local dollars.

[There is a debate as to whether or not these capital expenditures are truly "one-time" expenditures. More about that in a later post.]

Some have argued that the surplus should have been spent on school construction, but there are a couple of issues with that. First, year-end state budget surpluses are typically spent on one-time state capital projects, like new buildings for colleges, universities, and state agencies as well as building roads and preserving transportation corridors. If the state did not fund these projects, then these projects would never be funded since local governments are generally not responsible for funding these projects, particularly state agency and university buildings. Local school districts, on the other hand, are primarily responsible for building schools. A local funding mechanism already exists for local capital projects but not for state buildings (although local funding of state roads is increasing but is still a comparatively small amount).

Ironically, those calling for use of one-time state revenues for school construction are the same ones who do not include capital expenditures when determining how much Utah and the U.S. spend per student. Utah could spend hundreds of millions of state or local dollars on capital projects, but the legislature would still be criticized for not spending money on education because capital expenditures are not included in per student spending.

Utah’s per student spending trails other states, but the spending lobby should at least acknowledge that the Legislature and taxpayers have significantly increased per student spending for FY2007 instead of claiming that FY2007 spending increases are “status quo”.

I don't want a tax cut. My husband and I want our ganrdchildren to be well educated in public neighborhood schools that have the resources to do the job. How would we as business owners like to be asked to do our jobs with the least funding possible? Neither of us would like it. Fine teachers are quiting in droves. My grandchildren deserve better, and we are all going to see a tremendous personal "tax" increase if we are forced into private schools. We believe in public schools!!!!!

Children are our most important resource in Utah, and it is high time we start showing it. How a predominantly LDS legislature can put such a low priority on our school children is beyond our understanding!

Please, let's keep religion out of this.

It will take a lot more than money to get the education you want for your grandchildren. U.S. inflation-adjusted education spending per student is more than 100% higher than in 1970 yet test scores have hardly budged. In Utah, the increase hasn't been as much but it is still substantial.

And please, please don't blame it on the Mexicans.

When will you folks FINALLY realize that MORE money isn't the answer? When we stop running our schools the way the Soviets ran their agriculture, then we'll get the results we want. Choice, competition, performance pay, vouchers, charter schools, etc. are the answer.

I've noticed that the hostility in Utah towards education reform comes from the old, not the young.

And I've noticed that the hostility towards our public school teachers comes from an extreme right-wing faction that cares more about advancing their political agenda than actually helping children.

I'm a *young* father and want absolutely nothing to do with your ultra-partisan, ultra-conservative "education solution."

I also don't want this stupid, pointless tax cut. Your imperialistic, anti-tax, anti-government, anti-society, anti-patriotic, anti-poor, Rovian neoconservative K-street agenda is on its way out. You will soon lose your stranglehold on state and federal government. The voters will not let you destroy this great nation by turning our educational system into the hands of oligarchs and money-grubbers. Your Orwellian, fearmongering power-lust and desire to turn our country into the Corporate States of America is being exposed for exactly what it is.

Go moderate Republicans! It's time to take back our state.

"The most feasible way to bring about a gradual yet substantial transfer from government to private enterprise is to enact in each state a voucher system that enables parents to choose freely the schools their children attend. I first proposed such a voucher system 45 years ago." Milton Friedman.

"We've stood all we can stands and we can't stands no more." Popeye.

"The Democrats are actually starting to look good to me." Old Republican Voter.

Anon #3,

Here's a summary of your rhetoric and your analysis

Rhetoric
extreme right wing
against children
ultra-partisan
ultra-conservative
stupid
pointless
imperialistic
anti-tax
anti-government
anti-society
anti-patriotic
anti-poor
Rovian
neoconservative
K-street agenda
oligarchs
money-grubbers.
Orwellian
fearmongering
power-lust
Corporate States of America

Analysis/logic
None

Conclusion
No wonder your side is losing the education war. All you offer is higher taxes, more spending, mediocre student performance and name-calling.

In twenty years after meaningful education reform has been achieved and choice and competition are the norm, Americans will look at people like you and ask "Why did we ever listen to these people in the first place?"

Anon #1,

How would you as business owners like to pay your employees based on number of years of employment and how many degrees they have and NOT on performance?

How would you as business owners like to get your goods and services from ONE provider who is not forced to compete?

How would you as business owners like to pay more every year ABOVE INFLATION for your goods and services without those goods and services getting any better?

And finally, support for choice does not mean opposition to public schools.

Whoa...Somebody's button really got pushed in this entry. I've never seen one sentence so full of conservative bashing in my life...Amazing...Do they have awards for blogs?? They should, and if they hae a conservative bashing award I think this guy should be up for it.

Unfortunately, your rantings add nothing to the debate on public education. I would however, love for the anon who thinks that vouchers and school choice will lead to oligarchy to please explain why he thinks that so that we can actually have a meaningful debate.

Seriously, this debate is too important to leave to name calling. Last time I checked, the proponents for school choice have constantly presented logical arguments backed up with data and research to make their claims about school choice. We should expect the same from those who oppose school choice.

To the anon who stated the following:

"The most feasible way to bring about a gradual yet substantial transfer from government to private enterprise is to enact in each state a voucher system that enables parents to choose freely the schools their children attend. I first proposed such a voucher system 45 years ago." Milton Friedman.

I hope you're not trying to pull the old "voucher proponents want to destroy public education" argument.

Unfortunately for those who think they've discovered the deep dark secret that the Taxpayers Association and Parents for Choice in Education have been hiding from all of us all along, you're wrong. Friedman isn't arguing for the destruction of publicly funding education at all. Read it carefully.

What he's talking about is WHO RUNS our public schools, not whether or not we should publicly fund them. We can have publicly funded schools that are managed, operated, and created (this is the enterprise part that he talks about in the quote) by private people. Just like we have privately owned grocery stores that recieve public funds through food stamps. Or privately run pharmacies that receive public funds through medicaire or medicaid payments. We can have the same thing with our schools, and that's what Friedman is talking about.

thank you...again.

And to the young father who thinks this is ultra-partisan, think again. Vouchers have the highest approval rating among blacks and minorities. There are Democratic politicians at both the state and national level (Lieberman, for example) who support vouchers. And some of the places that have vouchers are very Democrat--Washington DC; Milwaukee;

There's even a Democrat running for the state senate in Ogden who supports school choice. Why? Because he's probably sick of seeing how our government-run schools fail the kids who need help the most.

Once again, can you say food lines in the Soviet Union????

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