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Six ways (and counting) to understate government spending growth

Elected officials and spending groups frequently understate government spending and government spending growth. We've identified at least six ways that these groups do this:

1. Increase government funding by increasing "non-mandatory" fees instead of taxes and then exclude fees when calculating tax burdens (sometimes fees are better than taxes, but they should still be counted)

2. Exclude capital and debt service costs when calculating per student spending (that's right, when your local school district asks you to vote for a property tax increase to build new schools, those tax dollars are not included in official statistics on per student spending.)

3. Exclude growth in "below-the-line" items in the Minimum School Program (line items outside the WPU).

4. Earmark state general sales tax dollars for roads and exclude these earmarks from general sales tax revenue and general fund expenditure figures.

5. Compare the pre-supplemental budget for the next fiscal year with the post-supplemental budget for this year.

6. Exclude one-time appropriations

Recently, we've seen an example of items #3 and #6. A local blogger wrote "Instead of a 4 percent increase [for education], lawmakers should have given at least a 10 percent increase".

The actual per student increase in the Minimum School Program -- which accounts for more than 90% of state/local funds for school district operations -- was 15.4% (or about 12.1% adjusted for one year's inflation). This obviously is much higher than 4%.

So where does the 4% figure come from? It comes from WPU growth, which excludes growth in below-the-line items. Frequently, local newspapers have equated WPU growth with spending growth, but this year they avoided that mistake.

Much of the inflation-adjusted 12.1% increase in per student spending is one-time (less than half), which has caused some critics to say education didn't really increase that much. Let's not forget that one-time appropriations are still appropriations and that education budgets have almost always had at least some one-time appropriations. One-time appropriations have contributed to increases in inflation-adjusted per student spending over the years as we've outlined in a previous post. Usually, one-time appropriations either become ongoing appropriations in future years or are replaced with other one-time appropriations.

Some of you may be wondering if we did a little bit of understating of government growth ourselves when we calculated inflation-adjusted per student growth in the MSP.

The answer is no. We used pre-supplemental FY07 as the base when comparing FY08. Fortunately, using pre- or post-supplemental figures doesn't matter much with the MSP because the MSP does not receive a lot of supplemental appropriations in the first place.

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