State and Local Education Finance
Financing for K-12 education is strained in several ways, as noted in this slide presentation. Property tax revenues are weakening, making the local tax less of a cushion against reduced state assistance. State revenues are volatile and less predictable than local taxes have traditionally been, and resources for education compete with other needs, such as health care. And the population of schoolchildren is increasing in states with lower fiscal capacities, smaller state budgets and harder-hit economies. Higher education spending, on the other hand, is growing — not through government appropriations but through greater reliance on tuition payments and is thus impacted by many factors, including federal loans and grants, interest rates, personal income and unemployment. As state differences in K-12 financing grow and higher education funding becomes more privatized, federal funding and policies may become more important. Yet federal funding for all levels of education is vulnerable — to the possibility of political inaction and automatic spending cuts, for instance.
Thomas Gais and Lucy Dadayan, May 22, 2012
States are spending more on schools, but differences in education funding have also been growing since the 2001 recession. The current economic downturn — as well as federal stimulus funds — could widen those gaps, according to this Institute report. The result could be a growing mismatch between funding levels and student need.
Allison Armour-Garb, Lucy Dadayan, and Thomas Gais, Nov. 4, 2009
New York's property tax is often criticized as burdensome and inequitable. A new Rockefeller Institute report for the Education Finance Research Consortium analyzes changes in the property tax from 1993-2006 to assess its impact across regions, property classes and ability to pay. Overall, the study found that however it is measured, the property tax burden rose during those 13 years. And the school property tax became more regressive, with effective tax rates in poorer districts rising relative to income.
Robert Ward, Lucy Dadayan, Suho Bae, and Donald Boyd, December 2008
For more than two decades, states saw lotteries and casinos as a bonanza of new dollars for education and other programs. Gambling revenue is now at an all-time high, but growth is slowing due to objections about social impacts and broader economic trends. And the report shows that states vary widely in their reliance on gambling revenues.
Lucy Dadayan, Nino Giguashvili, and Robert B. Ward, June 19, 2008
Presentation to the National Education Writers Association’s 61st National Seminar, outlining the effects of falling property values, demographic trends, and inflation on school finance. State revenue data are provided by region and for selected states. Concludes that schools have three choices: raise taxes, cut services, and/or find ways to use resources more cost-effectively.
Robert B. Ward, Presented at the National Education Writers Association 61st National Seminar, April 26, 2008.
State-level information about changes in K-12 revenues between 2002 and 2005. The report finds that state governments’ funding of education fell in three out of four states since the last recession, after adjusting for inflation and enrollment. By contrast, local funding of education increased in three out of five states, and federal funding grew in all states. States, however, varied greatly in their fiscal experiences. States that had previously spent more than the national average on K-12 typically maintained or increased their revenues after 2002, while states that had spent less than the national average typically saw declines in state revenues and overall spending.
Suho Bae and Thomas Gais, July 2007
K-12 Education Spending By State and Local Governments: Drop in State Revenues After Last Recession Continued in 2005[PDF]
State support for K-12 education — in inflation-adjusted, per-pupil terms — continued to fall in 2005, over two years after state revenues began to rebound from the 2001-02 recession. Increases in financial support from the federal and local governments cushioned school budgets from the full effects of cuts in state funding. But in states that have traditionally spent the least on K-12 education per pupil, these other sources were not sufficient to prevent overall education funding from dropping. These findings are described in this report by Suho Bae and Thomas Gais. The report is the third in a series of Institute reports on recent developments in state fiscal systems. Previous reports examined state social welfare spending and state-level tax and expenditure limitations.
Suho Bae and Thomas Gais, June 2007
States and their local governments play a crucial role in financing and delivering public services for children. Despite this important role, there is no comprehensive source of information on how much each state spends for children. This study, funded by the Annie E. Casey Foundation, helps fill that gap by developing and analyzing spending data for most major programs that benefit children.
Patricia Billen and Donald Boyd, April 2007