Five questions about education funding in Idaho. The ReThink Series Knowledge Base of Education Facts

Transcription

1 Five questions about education funding in Idaho. The ReThink Series Knowledge Base of Education Facts

2 Inside:... Idaho s State Board of Education and business leaders have embraced a goal that 60 percent of Idahoans hold a postsecondary degree by Here are five insights into Idaho s investment in education.

3 ReThink Funding / JKAF.ORG // PG 2 Background: As Idaho and the nation recover from the recent recession, economists are looking for the next driver of sustained growth. One solution is to improve education and worker skills in an era where advanced technology and a competitive global economy demand a well-educated and highly trained workforce. One benchmark embraced by Idaho s State Board of Education and business leaders is that 60 percent of Idahoans hold a postsecondary degree by This goal is ambitious and will require a considerable improvement in degree attainment levels. Just how will Idaho do this? To address this from a fiscal perspective, one must review the current level and nature of Idaho s investment in K12 education. This fact book addresses essential questions about Idaho s K12 funding system.

4 5 FIVE QUESTIONS ABOUT EDUCATION FUNDING IN IDAHO

5 ReThink Funding / JKAF.ORG // PG 4 Q1: Q2: Q3: Q4: Q5: How much does Idaho spend on K12 schools and how does that compare nationally? Where does the money for education come from? How does spending differ across Idaho and why? How do Idaho schools spend their money? Would spending more improve achievement? PG 05 PG 19 PG 25 PG 33 PG 37

6 Q1:... How much does Idaho spend on K12 schools and how does that compare nationally?

7 A: Idaho s per-student spending is second lowest in the country.

8 Q1: How much does Idaho spend on K12 schools and how does that compare nationally? A: Idaho s per-student spending is second lowest in the country. In 2011 the most recent year interstate comparisons are available Idaho schools spent $1.9 billion for ongoing operations.* That amounts to $6,821 per enrolled student. Only Utah spent less per student. A couple of factors explain Idaho s ranking. *Current (or ongoing operational) expenditures are supported by local, state, and federal revenue. Current expenditures exclude capital outlay, nonelementary/secondary expenditures, and interest payments on debt. Source: Cornman, S.Q. (2013). Revenues and Expenditures for Public Elementary and Secondary Education: School Year (Fiscal Year 2011). U.S. Department of Education. Washington, DC: National Center for Education Statistics. (Hereafter cited as NCES State Fiscal Report, 2011.) Note: NCES current expenditure amounts are not identical to those from the Idaho State Department of Education (SDE) because they include a number of different expenditure categories and institutions.

9 ReThink Funding / JKAF.ORG // PG 8 2ND TO LAST LA ST NOTE Most of the Mountain West states have per-student spending that is below the national average.

10 $20K $15K U.S. Average = $10,658 / student $10K $5K $ New York New Jersey Alaska Connecticut Wyoming Rhode Island Vermont Massachusetts Maryland New Hampshire Pennsylvania Maine Delaware West Virginia Wisconsin Hawaii Illinois Nebraska Ohio North Dakota Louisiana Montana Minnesota United States Michigan Virginia Source: NCES State Fiscal Report, 2011

11 United States K12 Expenditures per Student ///2011 ReThink Funding / JKAF.ORG // PG 10 Idaho = $6,821 / student Kansas Iowa Washington Oregon Arkansas Missouri Georgia Indiana New Mexico Kentucky California Florida South Dakota South Carolina Colorado Alabama Texas Tennessee Nevada North Carolina Mississippi Arizona Oklahoma Idaho Utah

12 Q1: How much does Idaho spend on K12 schools and how does that compare nationally? A: Idaho s small economy, relative to its number of school-age children, puts a natural limit on spending. At the root of school finance are three important figures: 1. The amount of total personal income in the state (total size of the economic pie) 2. The population of school-age children 3. The average number of children per family Idaho has more school-age children relative to income-producing adults than any other state except Utah and Alaska. This contributes to Idaho s low ranking in total personal income per school-age child. Of the 14 highest-ranking states, all but two Alaska and Wyoming have child-per-family statistics that are below the national average.

13 Total Personal Income per School-age Child, Ages 5-17 ///2011 ReThink Funding / JKAF.ORG // PG 12 $350K $300K NOTE Most Mountain West states have relatively small economies. $250K $200K $150K $100K $50K $ Connecticut Massachusetts New York North Dakota New Jersey Maryland Wyoming Virginia New Hampshire Hawaii Rhode Island Vermont Washington Pennsylvania Colorado Minnesota Florida South Dakota Delaware Alaska California Illinois Maine Nebraska Iowa Wisconsin Oregon Kansas Montana Missouri Louisiana West Virginia Tennessee Oklahoma Ohio Nevada North Carolina Texas Alabama Michigan South Carolina Kentucky Indiana Georgia Arizona Arkansas New Mexico Mississippi Idaho Utah Sources: The Urban Institute Brookings Institution Tax Policy Center, and 2011 five-year ACS estimates

14 Q1: How much does Idaho spend on K12 schools and how does that compare nationally? A: Idaho s K12 spending as a share of the state s economy has declined in recent years. Within the state s relatively small economy, Idaho policymakers and taxpayers decide what share to spend on K12 schools. That share has declined recently. K12 spending as a share of total personal income amounted to 3.5 percent in Idaho and 4.0 percent in the United States in Idaho s 3.5 percent rate is now as low as it was during the late 1970s.

15 ReThink Funding / JKAF.ORG // PG 14 K12 Current Expenditures as a Share of Total Personal Income, Idaho vs. U.S. /// % 4% U.S. Idaho 3% 2% 1% 0% Source: The Urban Institute Brookings Institution Tax Policy Center

16 Q1: How much does Idaho spend on K12 schools and how does that compare nationally? A: Idaho s spending as a share of its economy is similar to several other states in the region. Idaho s three regional peers in school finance, Utah, Nevada, and Arizona, have small economies relative to their school-age population and spend similar shares on K12 education.

17 ReThink Funding / JKAF.ORG // PG 16 7% K12 Current Expenditures as a Share of Total Personal Income /// % 5% 4% 3% 2% 1% 0% Alaska Vermont Wyoming New York New Mexico West Virginia New Jersey Arkansas Rhode Island Wisconsin Michigan Maine Ohio Georgia New Hampshire Montana South Carolina Louisiana Pennsylvania Alabama Delaware Nebraska Mississippi Kentucky Illinois United States Texas Connecticut Iowa Indiana Oregon Minnesota Missouri Kansas Maryland Utah Nevada Virginia North Carolina Idaho California Oklahoma Massachusetts North Dakota Tennessee Washington Colorado Arizona Florida South Dakota Hawaii Source: The Urban Institute Brookings Institution Tax Policy Center

18 EDUCATION IS THE THE GOLDEN DOO

19 KEY TO UNLOCK R OF FREEDOM. George Washington Carver

20 Q2:... Where does the money for education come from?

21 A: State-collected revenue plays a larger role in Idaho K12 funding than in most states.

22 Q2: Where does the money for education come from? A: State-level revenue from income and sales tax supports the majority of Idaho s K12 budgets. In 2011, state revenue represented 63 percent of Idaho s total K12 revenues compared with a 44 percent U.S. average. From 1997 to 2006, the relationship between state, local, and federal revenue in Idaho s K12 system was relatively stable. In 2006, the Idaho Property Tax Relief Act substituted a portion of Idaho s Maintenance and Operations property tax levy with a sales tax increase. This change had two impacts on finance: First, it eliminated the portion of property taxes that had been equalized across low- and high-property-wealth districts, thus affecting the equity of funding across districts. Second, it shifted funding from a relatively stable revenue source to a less stable one. In hard economic times, property taxes are more stable than sales taxes.

23 ReThink Funding / JKAF.ORG // PG 22 Idaho K12 Revenues by Type ($ millions) /// The Property Tax Relief Act of 2006 reduced local property tax revenues and increased state-level support. The recession of resulted in a drop in income and sales tax revenues from the state, as well as a temporary increase in federal funding. $1,600 $1,400 Property Tax Relief Act of 2006 $1,200 $1,000 $800 Recessionrelated effects $600 $400 $200 $ Source: NCES State Fiscal Reports

24 Q2: Where does the money for education come from? A: Idaho s revenue relies on fluctuating income and sales taxes, contributing to volatility in funding. Idaho ranked 16th for volatility in year-to-year K12 funding from 1997 to The state s K12 revenue mix contributes to the instability. Idaho school funding relies more heavily on volatile income and sales taxes, and less on property taxes, than the typical state. In a review of year-to-year changes in Idaho K12 spending, it is easy to spot the effects of recessions in the early 1980s, early 1990s, early 2000s, and post Spending shows a boom-bust pattern consistent with business cycles. The expiration of federal stimulus revenue explains, in part, the most recent dip in spending.

25 ReThink Funding / JKAF.ORG // PG 24 Year-to-year Change in Idaho s K12 Current Expenditures /// State funding formula revisions 20% 15% Recession effects appear 1-2 years postrecession 10% 5% Expiration of federal stimulus funding 0% % Recession Annual change Sources: NCES State Fiscal Reports and The Urban Institute Brookings Institution Tax Policy Center

26 Q3:... How does spending differ across Idaho and why?

27 A: On average, large school districts have lower per-student spending than small districts.

28 Q3: How does spending differ across Idaho and why? A: Small school districts spend considerably more per student because costs are spread over fewer students. Median enrollment of Idaho districts and charter schools is about 465, so half are larger and half are smaller. In small districts, the costs of core district administration a superintendent, payroll clerk, human resource manager, information technology specialists, etc. are spread over a small number of students.

29 ReThink Funding / JKAF.ORG // PG 28 Average K12 Spending per Student, by Idaho School District and Charter School Enrollment Quartiles /// * SM DISTRICTS /// 141 AVG. STUDENTS...$10,320 MED DISTRICTS /// 337 AVG. STUDENTS...$8,512 LRG DISTRICTS /// 851 AVG. STUDENTS...$8,127 XL DISTRICTS /// 5,862 AVG. STUDENTS...$7,083 *Charts to this point relied on data, the most recent available for interstate comparisons. Charts in this section rely on data, the most recent available from Idaho SDE. Source: Idaho SDE

30 Q3: How does spending differ across Idaho and why? A: Idaho school districts can boost spending with local tax increases. State and federal revenue provides the foundation for Idaho school budgets. The state distributes resources based primarily on average daily attendance and associated staffing needs. Federal government resources are mainly tied to poverty rates. Idaho s local school districts can add to state and federal resources with regular Maintenance and Operations, and supplemental override property tax levies. High-property-wealth districts can pass supplemental levies without limitation, and they are not required to share resulting revenues through equalization.* *The Property Tax Relief Act of 2006 eliminated the portion of M&O property taxes that had been equalized across low- and high-property-wealth districts.

31 ReThink Funding / JKAF.ORG // PG 30 Revenue per Enrollee, by Level of Government, Selected Large Districts, Idaho /// 2012 Local / Other Federal State $16K $14K $12K $10K $8K $6K $4K $2K $0 Boise Meridian Independent Joint Nampa Pocatello Coeur d Alene Idaho Falls Bonneville Joint Twin Falls Blaine County Vallivue Note: Does not include charter schools. Includes general M&O, special revenue, and food service revenues. / Source: Idaho SDE

32 Q3: How does spending differ across Idaho and why? A: By one measure, Idaho s K12 finance system ranks as the least equitable in the country. Education Week s Wealth Neutrality Index measures the relationship between levels of property wealth in local school districts and perstudent spending. Because Idaho s school districts have the ability to boost per-student spending through unequalized property tax revenues, Idaho s score was the highest most inequitable in the nation in 2011.

33 ReThink Funding / JKAF.ORG // PG 32 Education Week s Wealth Neutrality Scores: Relationship between District per-student Funding and Local Property Wealth /// Higher scores indicate a stronger relationship between districtlevel wealth and per-student spending Nebraska Alaska West Virginia Wyoming Utah Kansas Nevada Indiana New Mexico South Dakota California Iowa Oklahoma New Jersey North Carolina Kentucky North Dakota Massachusetts Wisconsin Connecticut New York Ohio Minnesota Arkansas Arizona Texas Vermont Oregon Tennessee Washington Montana Delaware Maine Missouri Alabama Colorado Florida Georgia New Hampshire Rhode Island Michigan Illinois Pennsylvania Louisiana Virginia Mississippi Maryland South Carolina Idaho Source: Education Week Research Center, 2014

34 Q4:... How do Idaho schools spend their money?

35 A: Idaho s K12 spending mix matches national norms and has not changed much over time.

36 Q4: How do schools spend their money? A: Idaho s K12 spending mix matches national norms and has not changed much over time. A breakdown of Idaho s spending per student is nearly identical to the U.S. mix for each category.* For example, 61 percent of spending per student in Idaho went to instruction in The U.S. average was also 61 percent. From 1997 to 2010, overall spending per student in Idaho grew by 3.7 percent annually. Most key categories increased at a similar rate. *Instruction expenditures include classroom instruction (including teachers and teaching assistants), libraries, in-service teacher training, curriculum development, student assessment, and instruction technology. Student support services include attendance and social work, guidance, health, psychological services, speech pathology, and audiology.

37 ReThink Funding / JKAF.ORG // PG 36 Share of per-student Spending by Spending Type, Idaho vs. U.S. /// % 2%...Other Support Services... 3% 2%...General Admin. Support... 2% 4%...Instructional Staff Support... 5% 5%...Student Transportation... 4% 5%...Food Services... 4% 6%...School Administration... 5% 6%...Student Support Services... 6% 9%...Operations & Maintenance... 10% 61%...Instruction... 61% 0% Note: Represents current expenditures. / Source: NCES, National Public Education Financial Survey Data

38 Q5:... Would spending more improve achievement?

39 A: Higher per-student spending does not guarantee higher student achievement.

40 Q5: Would spending more improve achievement? A: Higher per-student spending does not guarantee higher student achievement. Charts: Share of Idaho students with proficient or advanced scores in reading and math, ISAT, by district-level per-student spending. /// 2012

41 ReThink Funding / JKAF.ORG // PG 40 Reading % with Proficient or Advanced Scores in Reading 95% 85% 75% Kimberly Sugar-Salem Preston Jerome Payette Lake Pend Oreille Moscow Mountain View Kellogg Teton County Blaine County 65% $4K $6K $8K $10K $12K $14K $16K $18K Current Expenditures per Student Note: Each dot represents a district with at least 1,000 students. / Source: Idaho SDE

42 Q5: Would spending more improve achievement? A: In Idaho s large school districts, there is no clear relationship between per-student spending and achievement. Similar patterns emerge at the national level. From 1960 to 2005, K12 per student spending nearly quadrupled, adjusting for inflation. Student-teacher ratios fell, the share of teachers with a master s degree increased, and median teacher experience rose.* And yet the U.S. has not experienced a comparable gain in student achievement or graduation rates. These broad trends have led to many studies attempting to identify how schools can use their resources to become more productive or increase outputs for a given level of inputs.** *See Hanushek, E.A. & Lindseth, A.A. (2009). Schoolhouses, Courthouses, and Statehouses: Solving the Funding-Achievement Puzzle in America s Schools. Princeton University Press, pp **See, for example, Mishel, L. and Rothstein, R. (editors). (2002). The Class Size Debate. Economic Policy Institute.

43 ReThink Funding / JKAF.ORG // PG 42 Math 95% % with Proficient or Advanced Scores in Math Sugar-Salem Lake Pend Oreille Shelley 85% Moscow Preston Mountain View 75% Kona Kellogg Blaine County 65% $4K Payette $6K $8K Teton County $10K $12K $14K $16K $18K Current Expenditures per Student Note: Each dot represents a district with at least 1,000 students. / Source: Idaho SDE

44 Conclusion As Idaho strives to raise high school and postsecondary completion rates, the role of K12 funding will remain in the spotlight. This fact book seeks to provide a common foundation for that discussion.

45 ReThink Funding / JKAF.ORG // PG 44 First, Idaho ranks below all but one state in K12 spending per student. Why? Because the state s economy is small relative to its number of children. Idaho has the third highest child-per-family ratio in the nation. Compared to other states, Idaho has more students dividing up a relatively small economic pie. Second, it follows that if policymakers seek more resources for K12 education, income growth is a critical first step. If Idaho fails to grow its economy relative to the population of school-age children, the state will probably continue to rank low on per-student spending.

46 Policymakers face a chicken or egg dilemma. Should Idaho put a higher proportion of the state s available dollars into education in the hope that it will improve the economy? Or should Idaho focus on funding activities that will grow the economic pie so that there will be more dollars for education? Or both?

47 If Idaho elects to boost per-student spending, how would schools make the new money matter? Evidence and experience demonstrate that additional dollars alone do not guarantee improved results. Spending more money the same way business as usual has shown limited success elsewhere. ReThink Funding / JKAF.ORG // PG 46

48 FYI The ReThink Series is a quarterly report of education facts produced by the J.A. and Kathryn Albertson Foundation. This issue is in partnership with ECONorthwest, an economic, finance and planning consultant. jkaf.org econw.com