Wednesday, July 28

Debunking the Center on Budget & Policy Priorities claims on school funding

From Kansas Policy Institute.

Debunking the Center on Budget & Policy Priorities claims on school funding
By Dave Trabert, Kansas Policy Institute

The Center on Budget and Policy Priorities — an organization that is a big fan of government spending — released a report yesterday claiming that inflation-adjusted spending per-student in Kansas declined by 16.5 percent between 2008 and 2014.  Predictably, their claims are deliberately misleading.

For starters, they only look at what is recorded as state funding, not what is actually funded through state authority.  In Kansas, that’s a huge difference.  The Legislature makes provision for the financing of public schools in several ways. A complicated formula determines how funding is dispersed from the state budget. But the State also makes provision for districts to receive other funding.  For the 2011-12 school year, $3.2 billion dollars was sent to school districts out of the State budget. Another $2.1 billion was considered Local Revenue but $1.546 billion of that total was property tax money provided through State authority.

By focusing only on one piece of funding, CBPP conveniently ignores that many states, including Kansas, used ARRA stimulus money to backfill recession-driven declines in other funding.  The funding sources may have temporarily shifted but schools were nearly held harmless.  CBPP just wants to pretend otherwise.

State and local funding in Kansas is arbitrarily determined by which government writes the last check, but taxpayers write the first check… so it’s only appropriate to consider total taxpayer support when the impact on schools.

The above chart compares actual per-pupil funding of Kansas schools (blue line, including the KSDE estimate for 2013), the inflation-adjusted funding beginning in 1998 (red line) and the restated actual spending in constant 2013 dollars.  Inflation is based on the fiscal year change in the Consumer Price Index for Midwest Urban Cities, not seasonally adjusted.

Total taxpayer support of public education clearly has remained well above the levels adjusted for inflation and enrollment changes (blue line and red line).  Districts have enjoyed a real (inflation-adjusted) increase of 33% in per-pupil funding from taxpayers since 1998 ($9,549 to $12,738).

Inflation-adjusted funding appears to have declined by 3.7% since 2008 (green line) but that is also misleading.  Total funding as reported by the Kansas Department of Education is actually district-reported total expenditures. KSDE calculates local expenditures by subtracting the amounts they funnel to school districts from state and federal sources from district-reported total expenditures.  However, local expenditures are not the same as local funding because districts often do not spend all of the state and local tax dollars they receive.  The portion not spent is used to increase their cash reserves (and not reported as funding).

In constant 2013 dollars, total taxpayer support was $13,220 in 2008 and KSDE estimates it to be $12,738 in 2013.  With full time equivalent enrollment of 457,887, districts would have had to spend $221 million more in 2013 to have kept up with inflation in 2013…and they could have done so if they had spent all of the state and local tax dollars they received between 2008 and 2012!

Kansas school districts increased cash reserves in their current operating funds (All Other Funds above) by $301.6 million between 2008 and 2012 (data for 2013 won’t be released for a few months).  These funds function just like a personal checkbook; the only way they can increase their ending cash balances is to spend less than they take in each year.

While this analysis hopefully de-bunks the Kansas funding claims made by CBPP, I’d still like to address their Keynesian position on government spending.  Their report takes the position that reduced levels of government spending “…have slowed the pace of economic recovery by reducing overall economic activity.”  Government has no money of its own; it merely extracts money from taxpayers and redistributes it. This is a great example of CBPP’s big-government focus.  Economic activity is not increased by removing water from one end of the pool and pouring it into the opposite end.