Stark  Option  for  States:  Bank  Surpluses,  or  Invest  Them  on  K-12

Stark Option for States: Bank Surpluses, or Invest Them on K-12

By Anne Rowe for DPS board, February 26, 2019

States find themselves caught in between completing priorities

Public school supporters are scrambling to take on the windfall of money that’s landed in state coffers this year, the result of a surging economy and recent federal tax cuts.

More than half of states have spending plan surpluses this year, according to an Education Week analysis of local news reports and guvs’ state of the state speeches.

And district superintendents, teachers, and moms and dad groups have outlined a long dream list of things they say are required to improve stagnant academic results and school conditions, among them teacher raises, expanded pre-K, more nurses and school psychologists, and replacement of shabby school buildings.

Already, in at least 17 states—including in Arkansas and Mississippi, where yearslong spending plan deficits have caused extensive teacher scarcities—governors have showed that they will use a portion of that cash to provide instructors a pay raise.

But financial conservatives in many states have advised the public to pump the brakes. They rather desire to stash even more surplus dollars into state “rainy day” funds in preparation for another economic downturn. The last economic downturn, between 2007 and 2009, state leaders have advised school officials, ravaged school districts, and led to huge layoffs, the impacts of which schools are still reeling from today.

Arizona has a $1 billion surplus this year, much of which Gov. Doug Ducey desires to put into savings, a relocation that’s outraged the state’s public school neighborhood. “If ever there were a method to safeguard public education, to safeguard the pay raises our instructors have made and be worthy of, to prevent spending plan tricks, Band-Aids, and enormous cuts down the line, to prevent tax increases and budget standoffs and federal government shutdowns, it’s through this thoughtful, sensible, and fiscally conservative technique,” Ducey, a Republican said throughout his State of the State.

The spat over whether to spend or save has actually been especially animated across the country this year.

Teachers in Denver were set to strike this week over pay-related problems, even as Colorado legislators are disputing how to deal with an anticipated $600 million surplus over the next two years. Gov. Jared Polis, a Democrat, desires to use much of that loan to expand pre-K and full-day kindergarten.

And Los Angeles instructors last month went on a six-day strike over pay, class sizes, and school assistance personnel. District officials have indicated they can’t manage the deal they struck with the instructors and will go to the state to ask for more cash this session. California has a $21.4 billion surplus this year, and Gov. Gavin Newsom wants to invest loan on, amongst other things, schools, paying down the state’s pension fund and putting another $1 billion into the state’s rainy day fund.

Even in Oklahoma and West Virginia, where years of spending plan cuts have resulted in districts instituting four-day school weeks and custodians having to shovel coal into furnaces to keep classrooms heated, politicians are discussing what to do with hundreds of millions of surplus dollars.

While most states’ laws require a portion of surplus money to be placed in rainy day funds, it’s typically up to state leaders to choose what to do with the rest of that loan.

States’ budget plans this year have benefited from a surging economy and low unemployment rate, resulting in income and sales taxes rebounding to record levels, stated John Hicks, the executive director of the National Association of State Spending Plan Officers. Some states’ earnings have also benefited indirectly from the federal tax cuts passed by Congress in 2017. States this fiscal year are spending $294.8 billion on schools, according to NASBO, a 4.3 percent boost than they invested in financial year 2018.

“On average, school authorities are going to see a much better year,” he said.

But more than 29 states still put on’t offer school districts with the quantity of loan they offered before the Great Recession in 2008, according to a 2017 report by the Center on Budget plan and Policy Priorities, an advocacy organization that presses for more school costs.

The obstacle for guvs, legislators, and their fiscal advisors as they craft 2020 K-12 financial year spending plans is determining whether the surplus money is one-time or recurring, said Hicks.

“It’s difficult to do, but it’s an important decision to make so you wear’t develop a spending plan that’s unsustainable,” he said.

Governors with volatile budget plans, such as in Louisiana and California, who think their surplus loan will vanish next year are advising their legislatures to invest loan on school building tasks, jump-start academic pilot programs, or pay down pension funds, for example.

Governors who are confident the surplus loan will be recurring, such as in Idaho and Texas, are advising their legislatures to increase instructor pay, expand full-day kindergarten, and overhaul school financing formulas.

Risk of Guessing Incorrect

State spending plans developed on defective forecasts in the past have actually created havoc for school districts.

In 2017, more than half of states overstated how much tax revenue they’d pull in, requiring school districts to lay off staff in the middle of the school year, and outraging parents.

And while schools on average gobble up more than half of states’ budgets, other starved state departments, such as courts, foster care, and higher education are also requiring this year larger pieces of the pie.

Some Democratic governors have actually proposed to splurge on their schools.

New Mexico’s recently chosen governor, Michelle Lujan Grisham, a Democrat, has actually proposed every year increasing school costs by $500 million and offering the state’s teachers with a 6 percent raise this fall. The state is twisted up in a legal fight with its courts over whether its spending quantities are constitutional or not, and it has a $1 billion surplus this year.

“Things can and will be different, and better, starting now,” Lujan Grisham declared last month during her State of the State speech.

Massachusetts’s guv, Charlie Baker, a Republican, wants to boost the state’s public school costs by $1.1 billion over the next 5 years. That state, after several years of running a deficit, has a $1 billion surplus this year and many in the state think it’s finally time to replace the state’s storied school funding formula.

“We are underfunding education on the backs of our most vulnerable kids, wagering on which of them will figure out how to endure,” Tanisha M. Sullivan, the president of Boston’s branch of the NAACP said in an interview with the Boston Globe.

Nevada’s governor Steve Sisolak, a Democrat, proposed in his State of the State speech to overhaul its 50- year-old funding formula and provide instructors with a 3 percent pay increase, the very first pay bump the state’s teachers have received in more than 12 years.

Kansas Face-off

Nowhere, arguably, has the battle over school spending been more intense or substantial than in Kansas, where the state’s supreme court has threatened to shutter all public schools this April if the state doesn’t provide hundreds of millions more dollars to its school system this year.

The state has more than $900 million in surplus loan this year, the outcome of a resurgent economy, federal tax cuts, and new profits from a series of taxes Kansas restored last year to address a yearslong fiscal crisis.

The state last year assured to provide schools with $548 million more over the next five years. But the state’s supreme court said while that efforts was admirable, it still was not enough. The state requires to provide an approximated more than $360 million over the next five years to address inflation costs, the state’s board of education forecasts.

The Republican-dominated legislature and recently elected Democratic Gov. Laura Kelly are at odds over what to do with the surplus dollars. Kelly has proposed increasing school costs by $90 million next year.

But the state Senate last week passed a expense that would supply corporations and residential or commercial property owners with more than $190 million in tax cuts. A separate proposition by the Senate would outcome in the state using that surplus money to pay down pension funds, a relocation many legislators believe would free up costs for districts. A large part of the state’s legislature wants to neglect outright the supreme court’s newest needs.

Mark Tallman, a lobbyist for the Kansas Association of School Boards, said districts have actually utilized the infusion of cash from last year to supply teachers with a pay raise, lower class sizes, and to expand professional-development programs.

But understanding how unpredictable the state’s spending plan has been and thinking about how extensive this year’s propositions are over what to do with the surplus dollars, lots of local superintendents have squirreled away the money in their own districts’ cost savings accounts, a relocation that’s upset many teachers throughout the state.

“The range right now is between having no brand-new loan to run with to having 4 years of relatively ensured increases going forward,” Tallman stated in an interview, while driving to the state capitol for what he anticipated to be another grueling day of politicking.

Vol. 38, Problem 21, Pages 1, 22 -23

Published in Print: February 13, 2019, as Stark Choice: Conserve Surplus, or Invest on K-12?

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