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On the edge: Are states and school districts facing a funding cliff? Annual Meeting of the Education Writers Association Intercontinental Hotel, New Orleans, LA April 8, 2011 Donald J. Boyd Senior Fellow boydd@rockinst.org. Yes. Revenue Crisis Easing But Fiscal Crisis Continues.

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On the edge: Are states and school districts facing a funding cliff?

Annual Meeting of the Education Writers Association

Intercontinental Hotel, New Orleans, LA

April 8, 2011

Donald J. Boyd

Senior Fellow

boydd@rockinst.org

revenue crisis easing but fiscal crisis continues
Revenue Crisis Easing ButFiscal Crisis Continues

States are so far down it will be a long slow way back

Crisis hits school districts with a lag

Longer-term pressures loom after the cycle is behind us

it s a long way back
It’s a long way back

State tax revenue has grown for 4 quarters

But inflation-adjusted revenue is 9.7% below start of recession

Below recession start in 47 states

Down > 20%: LA, SC, GA, ID

Down 15 to 20%: UT, FL, AZ, AK, NM, OK, NJ

(Table in appendix)

most states face significant 2012 gaps
Most states face significant 2012 gaps
  • Per CBPP, at least 42 states face budget gaps for 2012
  • $112b in total
  • 18% of budgets
crisis hits school districts with a lag
Crisis hits school districts with a lag

Budget politics favor school aid -- hit later and lighter. But it’s where the $ is…

ARRA cushioned states, delaying state gov’t cuts. But states lose over $50b in 2012.

ARRA cushioned impact of state cuts on school districts

Property tax often takes 3-5 years to respond to housing price declines

education employment cuts already are historically deep
Education employment cuts already are historically deep

Down 205k jobs from Sep 2008 peak (-2.5%)

Over last 2 years, down in 20 of 35 states with data

Down more than 5% in: CA, MI, GA, IN, SC

Down 3-5% in NC, OR, NJ, AZ

Up more than 3% in TX, AK, WY, ND

education cuts deeper than most past recessions and slightly deeper than tax revolt of the 1980s
Education cuts deeper than most past recessions and (slightly) deeper than tax revolt of the 1980s
crisis hitting schools will continue
Crisis hitting schools, will continue

At least 34 states have cut some aid to education (CBPP)

At least 21 states proposing K-12 cuts for 2012 (CBPP)

Property tax: 77% of school district local revenue. Starting to weaken:

declining in many parts of CA, FL, and VA

growth slowing in other states

longer term pressures loom
Longer-term pressures loom

Pensions – required contributions will increase rapidly

Retiree health care – also will increase rapidly. More controllable

Medicaid – pressure on states

Federal budget cuts

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Rockefeller

Institute

The Public Policy Institute of theState University of New York

411 State Street

Albany, NY 12203-1003

www.rockinst.org

Donald J. Boyd,Senior Fellow

boydd@rockinst.org