sharon ward pennsylvania budget and policy center eplc 2008 education finance conference november...
TRANSCRIPT
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SHARON WARDPENNSYLVANIA BUDGET AND POLICY CENTER
EPLC 2008 EDUCATION FINANCE CONFERENCE
NOVEMBER 20, 2008
The Coming Storm:Education Funding in a Weakened
Economy
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Who We Are
The Pennsylvania Budget and Policy Center (PBPC) is a statewide, non-partisan policy research project.
PBPC provides budget and fiscal analysis and public education in support of policies that improve the economic and social well-being of low and middle income Pennsylvanians.
www.pennbpc.org
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Pennsylvania Budget All Funds
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State General Fund Spending 2007-2008
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Paying for State Services
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PA Ranks 30th in Expenditures
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…and Ranks 32nd in State Taxes
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Taxes Are Stable Over Time
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Property Taxes Trail the US Average
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Local Share is Higher
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2008-09 Budget Highlights
General Fund Budget: $ 28,264,430 4.0% increase $1.1 billion
General Fund Revenue: $28,784,200 Growth 3.1% $856 million
Education Funding Total $10.1 billion Basic Ed: $274 million increase: 5.5%
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Education Adequacy Gap: $600 Million
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The Economic Outlook is Grim
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As the National Economy Weakens So Does the Economy in Pennsylvania
Pennsylvania United States
Source. Keystone Research Center analysis of Center for Workforce Information and Analysis data.
Monthly Unemployment rate (%) in Pennsylvania and United States 1979 to 2008
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Unemployment will rise for several years even as the recession ends
Most recent year2007 2008 2009 2010 2008 2009 2010 2011
Unemployment rate (%) 4.4 5.2 5.9 6.7 5.6 6.8 8.0 9.2Employment rate (%) 61.7 61.4 61.1 60.8 61.1 60.5 59.8 59.2Change in real median household income (p.p.a) $48,437 -1.9 -1.9 -1.9 - - - -Povert rate (%) 10.4 10.9 11.5 12.1 12.0 13.6 15.3 16.9
Projected Recession
Mild to Moderate Severe
Table 2. Project Impact of Recession on Labor-Market Outcomes in Pennsylvania 2008-2011
Source. Keystone Research Center
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States Already in crisis
STATE BUDGET TROUBLES WORSENBy Elizabeth C. McNichol and Iris Lav November 12, 2008
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State Actions to Balance the Budget
Budget cuts have been proposed or enacted:
SCHIP and adult health–17 statesMedicaid: medical services, home care,
rehabilitative services—15 statesK-12 and early education—16 statesHigher education—21 statesState workforce reductions—10 states
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State General Fund Revenue 2008-2009
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State Revenue Slowed Early in 2008
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Potential Revenue Shortfall
FISCAL YEAR 2008-09
If current recession is same depth and duration of 2001 recession: $1.5 billion
Annualized revenue shortfall 7.1%: $ 2.1 billion
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Pennsylvania Response
2008-09 budget was changed Increase 3.9% down from 4.2% Real 1.3% reductions in many departments
Rendell October 30th response $311 millions in reductions for 08-09 4.25% for many departments, hiring freeze $40 million cut in Motor License Fund
November 19 update Governor estimates $1 billion to $2 billion deficit New cuts announced December 6
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Deficit Scenarios
(in $ thousands)Best Medium Worst
FUNDING NEEDSBeginning Deficit (from 2008-09) - (474,000) (474,000) No fiscal stimulus until 2009-10Funding needs 30,342,700 30,342,700 30,342,700 $450M for Educ., $700 Medicaid, $408M else (3%) TOTAL FUNDING NEEDS 30,342,700 30,816,700 30,816,700
AVAILABLE REVENUEFiscal Stimulus 700,000 400,000 200,000
Base GF revenues 28,047,312 27,230,400 26,685,792 2009-10 revenue growth from 08-09 3.0% 0.0% -2.0%
TOTAL REVENUE PRIOR TO TAX CHANGES 28,747,312 27,630,400 26,885,792
(1,595,388) (3,186,300) (3,930,908) Rounded millions (1,600) (3,190) (3,930)
2009-10 Funding Scenarios
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Balancing the 2008-09 Budget
Use the Rainy Day Fund: $750 million
Federal fiscal relief House bill: $426 million Senate bill: $923 million
Tightening up the budget: $500 million? Cost savings
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Paying for Public Investments
Revenue options Suspend the phase out of the Capital Stock and
Franchise Tax: $125 million Taxation of foreign corporations : $400 million first
year Add a natural gas severance tax: $200 million Raise the Personal Income Tax
3.07%: second lowest top rate in the country Raises .10 % raises $350 million
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The Future…..
Fight the cuts?Grow the pie?
Pennsylvania Budget and Policy Center412 North Third St.
Harrisburg, PA 17101717-255-7156
www.pennbpc.org