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National Perspective  K-12 and Higher Ed. Finance Issues

November 12, 2009Harrisburg, Pennsylvania

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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

“May You Live in Interesting Times”

Fictional English Translation of a Chinese Proverb

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Outline

• Current K-12 & Higher Education Spending

• Historical Perspective

• The American Reinvestment and Recovery Act

• Looking into the future

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K-12 Funding(Dollar amounts are in billions)

Federal

State Stabilization Total

FY 08 $221 $ 0 $221

FY 09 $223 $10 $233 (+5.4%)

FY 10 $214 $17 $231 (-0.9%)

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Funding For Higher Education Institutions

(Dollar amounts are in billions)

Federal

State Stabilization Total

FY 08 $61.7 $ 0 $61.7

FY 09 $60.6 $2.7 $63.3 (+2.6%)

FY 10 $57.5 $3.9 $61.4 (-3%)

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Projected for FY 2011 (Dollar amounts are all in billions)

Federal

State Stabilization TotalK-12 $214.0 $4.4 $218.4 (-

5.5%)

(-$12.6)

Higher Ed. $57.5 $1.1 $58.8 (-4.2%)

(-$2.6)

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Concerns

• It traditionally takes 18 to 24 months for state budgets to recover after a down-turn

• A recovery is not currently projected until the fall of 2009

• If these projections hold - state budgets would not begin to recover until the fall of 2011 or the winter of 2012

Pennsylvania’s Stabilization Fund Spending

FY FY FY

08-09 09-10 10-11

PA 4% 48% 48% ($748 million)

USA 32.5% 53.5% 13.9%

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Education Spending Per StudentSource: NCES

$1,500

$2,500

$3,500

$4,500

$5,500

$6,500

$7,500

$8,500

$9,500

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Education Revenue SourcesSource: NCES

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%Federal State Local

Issues with Local Funding

• During the 90’s several states instituted taxation/spending caps – how will these caps impact education spending?

• If we see reductions in state spending combined with increases in local spending what will this do to funding gaps?

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American Reinvestment & Recovery Act

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Award Programs• Race to the Top (RTTT, RTT, RT3)

– $4 billion

– Open to states

– Two rounds of award

– 15 projected winners

– Approximately $270 million per state

• State Testing Systems– $350 million

– Open to states

– Details will be coming in a few months

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Award Programs

• Innovation Fund (i3) – $650 million– Open to schools/districts and non-profit partners– Winners must produce a 20% match– Three awards

• $50 million• $30 million• $5 million

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Issues With Federal Funding

• Will there be a second round of federal Stabilization funding

• Federal funding will move from 9% of education spending to between 16% & 19% - will this have a long term impact

• What changes will come about with the reauthorization of the Elementary & Secondary Education Act (NCLB)

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Questions & Comments

Michael GriffithSenior School Finance Analyst

Education Commission of the StatesDenver, Coloradomgriffith@ecs.org

(303) 299-3619