School Finance

Alabama education fund revenue on pace to meet expenses

Sending more money to classroom part of Ohio Governor John Kasich’s plan to revamp school funding

University of Hawaii Foundation raises $66.9 million during fiscal year for public university system

California reaches deep into special funds to pay for schools, prisons, social services

Alabama education fund revenue on pace to meet expenses
Alabama finance officials said this week that they expect the state’s Education Trust Fund will collect enough revenue to meet its fiscal year 2012 target and avoid across-the-board spending cuts next year. The Finance Department reported that the trust fund has already raised $4.51 billion in the first 10 months of the 2012 fiscal year ending on September 30, 2012. That’s a 5.9 percent increase over the same fiscal year 2011 period. However, a legislative maneuver passed earlier this year also transferred $40 million from the fiscal year 2012 fund for use in 2013, so the fund will have to grow by 6.3 percent over the entire fiscal year 2012 period from 2011 levels if it is to break even with the $40 million in extra fundraising. The fund primarily collects money from state income and sales taxes, and has fluctuated with the economic ups-and-downs of the recession. More here…

Ohio Governor John Kasich plans to send more money to classroom and part of funding revamp
Ohio Governor John Kasich’s administration is working to design a new school funding formula, to be released early next year with the governor’s fiscal years 2013-2014 biennial budget. Since 1997, when the Ohio Supreme Court found the state’s school finance system unconstitutional, three other rulings have reached the same conclusion because it relies too much on local property taxes, severely disadvantaging land-poor school districts. The plan will allegedly include decreases in funding for administration, but divert more money to classroom costs. That may entail pooling districts’ services across a region to save administrative costs. Several House Finance Committee members in the state legislature are also taking on the challenge of rewriting the formula, and have embarked on a statewide tour to hear public opinion. Democrats in the legislature, however, are concerned that the funding formula will cut total dollars spent on K-12 schools, rather than simply shifting them to instructional costs. More here…

University of Hawaii Foundation raises $66.9 million during fiscal year for public university system
The University of Hawaii Foundation, a nonprofit organization that is separate from the university itself, raised $66.9 million for the school in fiscal year 2012. The funds will go to supporting the school’s 10 campuses. A plurality of the funds, $19.3 million, came from individual donors who were not alumni. University alumni contributed $15.4 million, while corporations donated $13.1 million to the school system, and foundations funded $13.3 million. According to the foundation, the fundraising included nearly $17 million for student aid. Faculty support was the next biggest category at $11.6 million, and funds for facilities totaled $10.4 million. More here…

California reaches deep into special funds to pay for schools, prisons, social services
California’s budget includes 560 “special funds,” accounts designated for specific purposes that collect revenue from particular taxes or fees. Because of the recession, the state has increasingly borrowed from those funds to afford educational and social services and prison costs that would otherwise be paid for from the state’s general fund. California currently owes those special funds $4.3 billion, more than five times the amount owed in fiscal year 2008, although the special fund dollars – $1.1 billion in fiscal year 2013 – comprise only a small portion of the $91.3 billion 2013 state budget. Governor Jerry Brown has promised to repay the funds with interest, but has no way to do so unless voters pass his suggested tax hikes in the November elections. Still, even before the recession, the state had failed to repay $448 million in special fund loans from 2002 and 2003, and $1.3 billion of the outstanding loans are not tied to repayment by any particular date. More here…

Those who have been following the presidential campaigns may have noticed that neither Obama or Romney have given early childhood care and education much attention. According to some panelists at an event on early childhood and the economy hosted by National Journal and sponsored by the First Five Years fund yesterday, that’s because few politicians give it top billing on their priority lists.

The economic recession has thrust more families into poverty and slowed federal, state and local revenue. A new report out this week from First Focus, “Children’s Budget 2012,” examines the amount of federal dollars directed toward children in this challenging climate.

Although total federal funding for children rose over the past five years by about 17.5 percent ($46 billion), the report finds this is primarily due to increased eligibility for entitlement programs such as the Children’s Health Insurance Program (CHIP) and the Supplemental Nutrition Assistance Program (SNAP), also known as food stamps. The annual discretionary funding Congress appropriates for children’s programs has fallen in each of the past two years, and dropped in inflation-adjusted terms by 1.5 percent between 2008 and 2012.

Missouri public school aid formula facing $700 million shortfall

Texas financial aid program to fall well short of need

Louisiana school officials face aid freeze challenges

Board vote means $300 million less for Texas schools

Missouri public school aid formula facing $700 million shortfall
Missouri public schools, assured that they will receive a set per-pupil amount each year from state and local funding, will instead collect about $250 million less than the full funding amount in the current 2013 fiscal year. By fiscal year 2014, the shortfall is expected to grow to about $700 million.  That’s because the state Department of Elementary and Secondary Education was supposed to increase the per-pupil funding target to $6,423 in 2013, but instead froze the target at $6,131 because of ongoing state economic concerns. The target is set to rise again next year to $6,716, but the Department has not yet decided whether it will freeze the target again. In fiscal year 2013, the Missouri legislature provided more than $3 billion for elementary and secondary public education. More here…

Texas financial aid program to fall well short of need
The Texas Higher Education Coordinating Board voted this week to request $580.8 million in fiscal years 2014 and 2015 for the state’s main financial aid program, Texas Grants, from the legislature. That’s a $21.2 million increase from the previous 2012-2013 biennial budget, paid for by transferring money from other grant or loan programs. Still, it won’t be enough to fully fund the program; full funding would total $1.4 billion. Lawmakers haven’t provided full funding for the program since 2004; although they have allocated more money every year since, the number of eligible students has risen more rapidly. As it is, about half of eligible freshmen will likely receive the grants. More here…

Louisiana school officials face aid freeze challenges
For the fourth consecutive year, state aid to Louisiana public schools will be frozen. The state funding that will remain stagnant is meant to support faculty salaries, costs of classroom resources like textbooks, and other issues. The only exception will be an increase in money due to higher enrollment, but although the total will increase, per-pupil enrollment will remain the same as in the previous three years. The fiscal year 2013 budget totals $3.4 billion and covers about 700,000 public school students. Three years of frozen budgets have forced layoffs, deferred salary increases, transfers from school districts’ rainy day funds, and cuts to transportation and other services. Earlier this year, voters approved a half-cent sales tax increase, dedicated in part to technology costs in schools and to cover the costs of state-required foreign language instruction in elementary schools, which will help to defray the effects of the stagnant spending. More here…

Board vote means $300 million less for Texas schools
Public schools in Texas were expected to see $5.4 billion in cuts to public education over fiscal years 2012 and 2013 until a legislator, Rep. Rob Orr (R-Burleson), proposed a constitutional amendment that would pour another $300 million into schools. The amendment passed both chambers of the legislature and as a referendum in last year’s elections. But now the School Land Board, the group authorized by the amendment to disburse the new money, has decided to save the funds rather than distribute the money to schools. That means legislators left a $300 million hole in last year’s two-year budget – expecting it to be filled with the newly-authorized funds – and schools are now stuck without the additional money in 2013. The money is only a small share of the $34 billion schools will receive for the 2012 and 2013 school years, but coupled with $2.3 billion in deferred payments to schools and a $3.9 billion Medicaid shortfall, could affect schools’ budgets. More here…

Members of the Senate Appropriations Subcommittee on Labor, Health & Human Services (HHS), and Education huddled today with Secretary of Education Arne Duncan and several school officials for a hearing to examine how sequestration – the automatic, across-the-board budget cuts coming in January – might affect education programs. Virtually everyone agreed: The impact on schools would be severe. Still, education stakeholders have been asking how sequestration might affect schools, and until this past week they lacked good estimates of those effects.

First, a quick review: Last summer, Congress passed the Budget Control Act, which required lawmakers to form a congressional “supercommittee” and hammer out a deal to reduce the deficit by at least $1.2 trillion over 10 years. The committee failed, and Congress didn’t pass any other deficit reduction package by its deadline, so federal agencies will be required as of January 2, 2013 to cut funding they will be allocated in a forthcoming fiscal year 2013 appropriations bill (Congress hasn’t passed the bill yet) by a uniform percentage. The supercommittee failure also triggered lower limits on future appropriations bills for the next eight years.

The automatic, across-the-board cuts are known as sequesters. Congress has previously used the device to enforce budget agreements, but in most cases, lawmakers have voted to “turn off” the sequesters before they take effect, rendering them moot. It’s still unclear whether Congress will pass a bill cancelling the cuts, or whether the president would sign such a law.

Perhaps most valuable for schools trying to plan ahead is the guidance that Deputy Secretary of Education Anthony Miller issued late last week to chief state school officers. That memo says that four programs – Title I grants, School Improvement Programs, special education Part B state grants, and Career, Technical, and Adult Education – that are funded though “advance appropriations” will actually be exempt until the 2013-14 school year. In other words, these programs have already been allocated a big chunk of fiscal  year 2013 funding ahead of time and that funding is now exempt from the sequester in January.

That means schools will be spared cuts to those programs – which comprise most of the largest funding blocks in the Department’s discretionary budget – until the 2013-14 school year. Other federal programs will feel the cuts as soon as January 2013. As Deputy Secretary Miller said, schools will not have to lay off teachers or postpone hiring for the upcoming school year – and lawmakers have some time to find another workaround to the pending cuts.

There is one exception to the delayed effects of sequestration for education programs.  The Impact Aid program, appropriated $1.2 billion in fiscal year 2012, is not funded with advance appropriations. It will therefore see the effects of sequestration as early as this fall. As one witness at today’s hearing pointed out, for some school districts Impact Aid makes up a huge portion of their budget. For those schools, funds will be affected for the 2012-13 school year, and the cuts would place a substantial hardship on those districts.

Stakeholders were also interested to hear Secretary Duncan give his best estimates of the Department’s plans for sequestration in today’s hearing. Pell Grants, he confirmed, would be exempt from sequestration. Other programs wouldn’t be so lucky. The Department will not have leeway to pick and choose which programs will be cut. The law is written such that virtually all Department programs will face across-the-board cuts. The Department’s current estimates, using a Congressional Budget Office estimate, is that the agency’s programs will be cut by 7.8 percent compared approximately to what they received in fiscal year 2012. That translates to $1.1 billion less for Title I grants, and $900 million less for special education state grants.

Chairman of the Subcommittee Tom Harkin released his own report ahead of the hearing. The report uses the same 7.8 percent estimated across-the-board cut to predict expected cuts to a variety of Department of Education programs, including $41.6 million from the school improvement grant (SIG) program, almost $90 million from the federal Impact Aid program, and $76.1 million from federal work-study grants for college and graduate students.

There are too many unknowns at this point to make accurate claims about the impact sequestration would have on school districts – for one, only the Senate Appropriations Committee and House Appropriations Labor-HHS-Education Subcommittee have passed fiscal year 2013 appropriations. So we don’t yet know from what level programs will be cut. And Congress may yet cancel the sequester in favor of a more generous budget for fiscal year 2013 (that could happen in the lame duck session Congress will hold between the elections and the 2013 presidential inauguration). But Secretary Duncan’s testimony and Deputy Secretary Miller’s issuance give the first inside look at the planning for sequesters happening inside the U.S. Department of Education.

Mississippi schools to seek $320 million more in 2014

New Jersey’s Rutgers University raises in-state tuition 2.5 percent despite protests

South Carolina Senate overrides veto of $10 million for teachers

Audit: Colorado tuition up, state stipend decreases

Mississippi schools to seek $320 million more in 2014
The Mississippi State Board of Education this week released its official request to legislators for the amount of funding public K-12 schools will require in the 2014 fiscal year. The formula, known as the Mississippi Adequate Education Program, requires the Board to request the full funding amount required under its calculations from lawmakers. However, legislators have often under-funded the formula. In the current 2013 fiscal year, for example, public schools received $2.04 billion, $251 million less than required by the formula. For next year, the Board has requested $2.34 billion – $321 million, or 16 percent, more than was provided this year. Legislators say it is too soon to say whether the state will be able to afford that. However, they are also likely to wait for the results of a commission appointed to review the funding formula and offer recommendations for improvement. More here…

New Jersey’s Rutgers University raises in-state tuition 2.5 percent despite protests
Rutgers University students went before the Rutgers Board of Governors and staged protests outside the board’s regular meeting this week to request a tuition freeze for the 2012-13 academic year, but without results. The board voted to raise tuition and fees for in-state students by 2.5 percent for the academic year beginning this fall. The tuition hike comes in spite of the fact that state funding for the school was held constant at 2012 levels this year; legislators cut funding for the school precipitously in recent years, and institutions are still struggling to make up the difference. The increase means New Jersey students will be charged $13,073 in tuition and fees this year, $318 more than last year. Room and board will also increase by 1.9 percent, up to an average of $10,970, or $206 more than last year. Graduate students and out-of-state undergraduate students also saw their costs rise – in-state graduate students will pay 2.5 percent more per credit hour, and out-of-state students will be charged a 4 percent increase, $910 more than last year. University officials said they plan to find $20 million to cut from the school’s budget over the next year to hold down costs. More here…

South Carolina Senate overrides veto of $10 million for teachers
The South Carolina Senate voted this week to restore $10 million in the state’s fiscal year 2013 budget that had been vetoed by Governor Nikki Haley. The funds will help compensate school districts for a state-required teacher salary bump this year. Without the state dollars, lawmakers said, districts would be required to raise property taxes to cover the mandatory two percent salary increases. Governor Haley stated that she vetoed the provision because it offered only one-time funding; the veto left intact $39 million for the salary increases that are paid for with recurring funds. The $10 million newly-restored dollars, meanwhile, came from an education innovation fund created in 1984 with a one-cent addition to the state sales tax, and would not necessarily be funded every year. More here…

Audit: Colorado tuition up, state stipend decreases
An audit of Colorado colleges released this week found that students are paying more in tuition since lawmakers began to decrease funding for a stipend program that provides money directly to students, rather than to institutions. The audit found that the recession slowed the implementation of the 2006 policy, called the College Opportunity Fund. Since the start of the recession, students’ stipends have dropped as the state struggled to keep up with its expenditures in the face of falling revenue. The per-credit hour stipend decreased from $80 in fiscal year 2006 to $62 in 2011; at the same time, institutions raised tuition in part to accommodate for lost state funding, up from $6,660 to $8,530 on average. Student enrollment also grew by about 24 percent, while state spending dropped from $272 million in 2006 to $269 million in 2011. Although the law requires the state department of higher education to request the full funding amount needed including inflation and enrollment increases, the department has not done so in recent years because of budgetary considerations. More here…

Corbett signs bill to help troubled Pennsylvania school districts

Nevada school district: Race to the Top money not worth the effort

Kansas Board of Education recommends $440 million increase in base state aid to schools

Arizona governor opposes initiative to make education sales tax permanent

Corbett signs bill to help troubled Pennsylvania school districts
Pennsylvania Governor Tom Corbett signed into law this week a bill that helps financially distressed school districts balance their budgets. Under the new law, the state secretary of education will appoint a chief recovery officer to districts deemed in “financial distress” to work with local school boards to create a recovery plan. Should the board approve the plan, the district will be eligible for interest-free loans from the state. Under the law, districts may go to new lengths to save money. The financially-distressed districts are allowed to cancel or renegotiate contracts that did not involve collective bargaining agreements; close schools and eliminate positions for professional employees or transfer those faculty members; hire teachers without certain certifications at the Secretary’s discretion; and convert schools to charter schools if that would save money. More here...

Nevada school district: Race to the Top money not worth the effort
The Clark County School Board in Nevada this week announced its decision not to compete for the new district-level federal Race to the Top grants because they argue that the costs and restrictions associated with the grant far outweigh the potential benefits. One board member said that Clark County, with 309,000 students and a $2 billion annual budget, is eligible for a maximum grant of only $6 million. Given that the grant requires creating a “personalized learning environment” for every student in a 10,000-student pilot program with an expectation that the program will expand to more students at the completion of the pilot program, the size of the award was not expected to cover the potential costs. Implementing a comprehensive teacher, principal, superintendent, and school board evaluation system by the 2014-2015 school year also seemed too challenging and costly given the size of the grant. Board members said they would instead pursue funding with fewer requirements attached. More here...

Kansas Board of Education recommends $440 million increase in base state aid to schools
Kansas’ State Board of Education has submitted a recommendation for a $440 million increase in base state aid to school districts. In the 2008-09 school year, base state per pupil expenditure was $4,438 per pupil, but in the face of a significant drop in state revenue, legislators cut that number to $3,838 dollars for the 2012-13 school year. Under Kansas law, the base state aid level is set by law at $4,492 per pupil for 2012-13, and the Board of Education’s recommendation would restore aid to those levels. The legislature will take the recommendation under consideration in next year’s 2013 legislative session, but many dismissed the proposal out of hand.  Governor Sam Brownback has not yet broadcast his feelings about the recommendation, but Republican lawmakers cited the anticipated expense of implementing the new federal healthcare law as costing dollars that would have otherwise gone to the school districts. More here...

Arizona governor opposes initiative to make education sales tax permanent
Arizona Governor Jan Brewer announced Monday that she opposes making permanent a temporary two-year sales tax that directed funding to K-12 schools, although she fought for the initial implementation of the temporary tax. Most of the approximately $1 billion collected each year from the 1 cent surcharge automatically is directed towards K-12 funding, with the remainder targeted to scholarships for higher education, children’s health insurance, and infrastructure projects. Brewer stated that she opposes any initiative that bypasses the legislature and instead automatically allocates funds. Proponents of the initiative say that voters don’t trust the legislature with their money, and would rather allocate it directly to K-12 education spending. The measure may not make it on the ballot this November due to a technical legal question about its filing, but proponents of the initiative claim that internal polling shows a substantial majority of Arizona voters would support the measure if it does. More here...

The Asset Building Program hosted an event Wednesday, July 11 to release the July/August issue of the Washington Monthly. The issue focuses on the importance and applicability of the asset building agenda in the lives of all Americans. Utilizing the magazine's focus as a frame for the event, our panelists tackled critical themes such as savings as a path to higher education, the importance of life-long savings mechanisms, the role of federal policies in promoting prosperity, and a growing political divide between young and old Americans.

The New America Foundation's Federal Education Budget Project (FEBP) this week published an update to its education funding database, www.edbudgetproject.org. The update includes the most recent data available for virtually all of the nation’s institutions of higher education. The FEBP database features information on federal funding, student demographics, and student achievement for all 50 states and nearly 14,000 school districts, as well as more than 7,500 institutions of higher education. FEBP is the only centralized source of these data available to the public, the media, and education policymakers.

Updated higher education data for the 2010 school year include:

• Price of attendance by institution;
• Spending on federal aid programs and number of recipients, including Pell Grants, Stafford Loans, PLUS Loans, Perkins Loans, Work Study, and Supplemental Education Opportunity Grants, by state and institution;
• Average federal, state, local, and institutional grant and loan aid per student as well as percent of students receiving such aid by state and institution;
• Enrollment by institution and state, including demographic breakdown by race/ethnicity and gender;
• Student outcomes, including graduation and retention rates, federal student loan two-year default rates, trial three-year cohort default rates for 2006 through 2008, and federal student loan repayment rates by state and institution, where appropriate; and
• Net price by institution for students from families who make $30,000 annually or less for 2009 and 2010.

The FEBP website enables users to view and download education data profiles for states, school districts, and institutions of higher education. Users can conduct custom comparisons of similar states, districts, and institutions to better understand how federal funding, student outcomes, and student demographics vary and interact across the nation. These dynamic comparisons can be used to answer a number of education policy questions.

To view the higher education data in FEBP, click here.

The Asset Building News Week is a weekly Friday feature on The Ladder, the Asset Building Program blog, designed to help readers keep up with news and developments in the asset building field. This week's topics include anti-poverty initiatives, access to financial services, and inequality.