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March 4, 2011 Austin, Texas Michael Griffith Senior Policy Analyst Education Commission of the States 1 Slide 2 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.orgwww.ecs.org 2 Slide 3 Education spending A national picture What does this mean for your state? How can you still support your education mission in this environment? 3 Slide 4 FY 2011-2012 will be the worst budget year since the Great Depression 4 Slide 5 Yes, Wyoming 5 Slide 6 6 Slide 7 American Reinvestment & Recovery Act ($100 billion) Funding: Early Learning ($2 bill) K-12 ($70 bill) Higher Ed. ($28 bill) Education Jobs Fund (Edu-Jobs) ($10 billion) States must distribute the funding in FY 2010-11 but districts have until FY 2011-12 to spend it. 7 Slide 8 Fiscal Year 2007-08 2010-11* State 47.9% 40.3% Local 43.3% 44.0% Federal 8.8% 15.7% Each 1% swing in funding represents $5.7 billion *Estimated 8 Slide 9 9 NCLB ARRA & Edu - Jobs Slide 10 Pensions Health Care 10 Slide 11 Pensions Teacher Pensions: Pew estimates that there is a $500 billion shortfall nationwide. Health Care Costs: Account for up to 10% of all K-12 spending These costs are increasing by a rate of 10% to 15% each year 11 Slide 12 Can anything be done about health care and pension costs? 12 Slide 13 Other than cutting benefits what can states do? Move new employees to defined contribution plans like 401k plans Create hybrid systems Increase vesting time for new employees Close loopholes in the system 13 Slide 14 What can states do other than cutting services or increasing employee contributions? Move to joint purchasing: Some states have look at mandating that all school districts participate in a health care pool 14 Slide 15 What We Need are Solutions! 15 Slide 16 Salaries & benefits drive education costs: 65% - educator salaries & benefits 15% - other staff salaries & benefits Benefits alone account for 20% of education spending Total administrative costs account for 7.5% Transportation costs account for 4.2% Instructional supplies (including textbooks) 3.3% 16 Slide 17 Promote school district purchasing co-ops A study in Delaware found that if school districts pooled their purchasing power, they could reduce their costs from 8% to 14%. Encourage districts to work together to educate high- need special education students. Studies have found that this can result in both improved quality of education and reduce costs. 17 Slide 18 Texas: Combining services The state is providing financial incentives to districts that are willing to combine services School district consolidation Maine has been working on this over the past 3 years Kansas, Michigan and other states are currently reviewing this option Iowa provides financial incentives to districts to consolidate 18 Slide 19 Some districts are moving to a four-day school week ECS has found that 120 districts (less than 1% of total) make use of a four-day week Districts who move to a four-day week tend to save less than 3% In 2009-10 Hawaii shortened its school year by 15 days Teachers are donating 6 days in order to eliminate 15 furlough days Banks provided funding to schools to help them bridge the gap 19 Slide 20 Adopting New Funding Systems Ohio and Rhode Island in 2010 Pennsylvania in 2009 All three states took the opportunity to streamline their systems New York has recently allowed districts greater flexibility in spending 20 Slide 21 California: Changing Kindergarten Start Date California is pushing date from Dec 2 nd to Sep 1 st This will reduce Kindergarten enrollment by 100,000 State grants will be made available for Early K programs This change will produce $700 million in savings 21 Slide 22 Or Are bad times the new Norm? 22 Slide 23 Traditionally it takes 18 to 24 months for state budgets to recover after a recovery begins Most economist agree that a recovery started in 3 rd or 4 th quarter of 2009 If this recovery holds education budgets will begin to see improvement in mid to late 2011 23 Slide 24 For the first time in four years state income and sales tax revenue has increased for three straight quarters. 24 Slide 25 303-299-3619 mgriffith@ecs.org www.ecs.org 25