January 21st Lincoln Institute

Michael Griffith

Senior Policy Analyst

Education Commission of the States

The only nationwide education interstate compact

Founded in 1965 to enlighten, equip and engage education policy makers

53 member states, territories and the District of Columbia

Web Site: www.ecs.org

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Education spending – A national picture

The increased federal role

National Funding Problems

Solutions

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Average Spending Per Pupil

Adjusted for Cost of Living

National Average $10,506 $10,506

Rhode Island $18,729 (1) $15,389 (2)

Vermont $15,466 (4) $13,810 (3)

Maine $13,978 (7) $12,489 (7)

Massachusetts $13,804 (8) $12,357 (10)

New Hampshire $13,112 (10) $11,738 (13)

Connecticut $14,472 (6) $11,236 (18)

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Federal State Local

National 9.4% 47.1% 43.5%

Connecticut 6.7% 37.9% 55.4%

Maine 10.8% 38.5% 50.7%

Massachusetts 7.9% 37.6% 54.4%

New Hampshire 5.4% 37.0% 57.5%

Rhode Island 8.2% 40.5% 51.3%

Vermont 8.0% 86.5% 5.5%

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In the past three years all states have made some cuts in education spending.

Number of States that made cuts to their K-12 primary funding formula:◦FY 2008-09: 20 states◦FY 2009-10: 30 states◦FY 2010-11: 38 states

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During the last four economic downturnsState funding tended to decrease as a percentage of

total K-12 education fundingLocal funding tended to increase as a percentage of the

total, andFederal funding remained flat or slightly increased

A greater reliance on local funding creates greater inequity between the “haves” and the “have-nots”

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American Reinvestment & Recovery Act ($100 billion)Funding: Early Learning ($2 bill) K-12 ($70 bill) Higher Ed. ($28 bill)

Education Jobs Fund (Edu-Jobs)($10 billion)States must distribute the funding in FY 2010-11 but

districts have until FY 2011-12 to spend it.

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Fiscal Year Fiscal Year 2007-08 2010-11*

State 47.9% 40.3%

Local 43.3% 44.0%

Federal 8.8% 15.7%

Each 1% swing in funding represents $5.7 billion

*Estimated

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NCLB

ARRA &Edu - Jobs

Pensions

Health Care

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Teacher Pensions: Pew estimates that there is a $500 billion shortfall nationwide.

State Liabilities (2008)◦ Connecticut $15.8 billion◦ Maine $ 2.7 billion◦ Massachusetts $21.8 billion◦ New Hampshire $ 2.5 billion◦ Rhode Island $ 4.3 billion◦ Vermont $ 0.5 billion

Funded below 80% level

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Health Care Costs:

◦Account for 6% to 8% of all K-12 spending

◦These costs are increasing by 10% to 15% each year

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What We Need are Solutions!

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Other than cutting benefits what can states do?

Move new employees to defined contribution plans – like 401k plans

Create hybrid systems

Increase vesting time for new employees

Close loopholes in the system

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What can state’s do other than cutting services or increasing employee contributions?

Move to joint purchasing:◦Michigan: All school districts must now

participate in the state’s health care pool

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Salaries & benefits drive education costs:◦ 65% goes to educator salaries & benefits◦ 15% go to other staff salaries & benefits

Benefits alone account for 20% of education spending

Total administrative costs account for 7.5%

Transportation costs account for 4.2%

Instructional supplies (including textbooks) 3.3%

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180 School Days Average Class Size of 25

175 School Days Average Class Size of 25

180 School Days Average Class Size of 26

Number of Students 1,500 1,500 1,500

Average Class Size 25 25 26

Number of Days 180 175 180

Total Teaching Costs $4,073,925 $3,960,760 $3,917,236

Total Savings   $113,165 $156,689

Percentage Savings   2.8% 3.8%

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Promote school district purchasing co-ops◦ A study in Delaware found that if school districts pooled their

purchasing power, they could reduce their costs from 8% to 14%.

Encourage districts to work together to educate high-need special education students. ◦ Studies have found that this can result in both improved quality of

education and reduce costs.

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Texas: Combining services The state is providing financial incentives to districts

that are willing to combine services

School district consolidation Maine has been working on this over the past 3 yearsKansas, Michigan and other states are currently

reviewing this option

Iowa provides financial incentives to districts to consolidate

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Some districts are moving to a four-day school weekECS has found that 120 districts (less than 1% of total)

make use of a four-day weekDistricts who move to a four-day week tend to save less than

3%

In 2009-10 Hawaii shortened it’s school year by 15 daysTeachers are donating 6 days in order to eliminate 15

furlough daysBanks provided funding to schools to help them bridge the

gap

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Adopting New Funding SystemsOhio and Rhode Island in 2010Pennsylvania in 2009

All three states took the opportunity to streamline their systems

New York has recently allowed districts greater flexibility in spending

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California: Changing Kindergarten Start Date◦ California is pushing date from Dec 2nd to Sep 1st

◦ This will reduce Kindergarten enrollment by 100,000

◦ State grants will be made available for Early K programs

◦ This change will produce $700 million in savings

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Traditionally it takes 18 to 24 months for state budgets to recover after a recovery begins

Most economist agree that a recovery started in 3rd or 4th quarter of last year

If this recovery holds education budgets will begin to see improvement in mid to late 2011

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303-299-3619mgriffith@ecs.org

www.ecs.org

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