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Beneath the rhetoric: Numbers show decline in state support for education

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Arizona’s policymakers often proclaim education as a priority, but a review of years of fiscal data shows that the rhetoric doesn’t match up to the reality.

The numbers indicate a shift in priorities that accelerated following the Great Recession.  Even as state revenues began climbing back up, the per pupil allocation from state sources remained below pre-recession levels.

Nowhere is this shift starker than when looking at Arizona’s per pupil spending, a trend affirmed by a recent report from the U.S. Census Bureau, which has been tracking education funding by the states for decades.

The report, which is based on FY2013 numbers, show that Arizona is No. 48 among the states when it comes to K-12 revenues, and dead last when it comes to spending, an embarrassing headline for a state that’s trying to market itself as the best place for business.

All told, Arizona spends $7,208 per pupil. In comparison, the U.S. on average allocates $10,700 per pupil. Arizona also lags most states on every major spending breakdown, including wages and benefits, and support services, the report says.

More significantly, a breakdown of the data shows that in FY2013, the money available from state-only sources was only $3,116 per student, which puts Arizona at the bottom behind South Dakota, Florida and Texas.

A cut of more than $1,000 per child

A decade of data from the Census Bureau shows that a downward trend in state spending is pulling Arizona’s ranking down.

To be sure, the ranking tells an incomplete story. It doesn’t take into account variations in the standard of living, the diversity of populations in each state, and per capita income. New York, which sits atop the rankings, has a per capita income of $32,382, which is $4,000 more than the U.S. average. Arizona’s per capita income is nearly $3,000 less than the national average.

So while the news that Arizona is dead last in state support for K-12 schools might embarrass policymakers, the more revealing number is the actual spending per pupil through the years.

In FY2003, state support for K-12 education was $3,283 per pupil. It rose during the next several years, but declined rapidly during and after the recession to $3,116 by FY2013.

The historical figures are not adjusted for inflation. Taking that into account, the state funding in FY2013 would have to be $4,157 per pupil to have the same buying power as 10 years before, according to the federal government’s inflation calculator.

In effect, the FY2013 state funding level amounted to a cut of more than $1,000 per pupil.

Local burden increases

The most underreported story of Arizona’s K-12 funding is this: As the state’s share of total allocation for K-12 education dipped, the burden fell on local taxpayers to pick up the slack.

Share of revenue sources
Federal State Local
2013 15% 36% 49%
2012 13 36 50
2011 15 37 48
2010 18 36 46
2009 12 44 44
2008 11 49 41
2007 11 48 41
2006 12 45 43
2005 12 44 44
2004 12 45 43
2003 11 45 44

Source: US Census Bureau, Public education finances series

The state share fell from a high of 49 percent in FY2008 to a low of 36 percent in FY2013.

In the same period, the local share inched up, reaching 50 percent in FY2012 before dipping slightly to 49 percent in FY2013, thanks to a slight increase in federal money.

Before the recession, the share of local revenues had hovered in the low 40s, dipping to 41 percent in FY2007 and FY2008 just as the state share was peaking.

Since the bulk of local resources come from property taxes, the shrinking state share means property owners in school districts are paying for a larger and larger share of the education tab through bonds and budget overrides.

But, as is often the case, local communities’ generosity is hit or miss.

Debbie Burdick, superintendent of the Cave Creek Unified School District, is grateful that voters approved two bond measures last November: The first would raise $30 million, and the other would repurpose another $10 million to fix school buildings.

The district is also recommending to its board to ask voters this year for an override, which, if approved, would raise
$4 million. Burdick said the money will help fill a fiscal gap following a decision by lawmakers and Gov. Doug Ducey to cut by half the additional support for district-sponsored charter schools.

But districts aren’t always fortunate.

After voters failed an override request last year, the Apache Junction Unified School District is considering whether to shut an elementary school.

Far below the national average

Arizona’s spending for K-12 schools has always been historically low compared to other states, but its rank was at least middling in the 1990s, according to the Census Bureau.

In 1992, Arizona’s elementary and high school spending from all sources was
87.7 percent of U.S. average.

But by FY2013, it stood at 67 percent, a 20 percentage point decline compared to the national average.

The drop is particularly sharp when counting only state resources: Between FY2008 and 2009, when revenues were hemorrhaging, state support fell by 10 points, from 78 percent to 68 percent of the national average.

The schools have yet to recover from the shock.

$ AZ $ U.S. average $ Difference
1993           2,102            2,698               596
1994           2,084            2,765               681
1995           2,264            2,961               697
1996           2,419            3,104               685
1997           2,387            3,288               901
1998           2,458            3,473            1,015
1999           2,664            3,715            1,051
2000           2,910            3,974            1,064
2001           3,110            4,253            1,143
2002           3,285            4,396            1,111
2003           3,283            4,525            1,242
2004           3,411            4,553            1,142
2005           3,469            4,774            1,305
2006           3,619            5,018            1,399
2007           4,335            5,466            1,131
2008           4,516            5,805            1,289
2009           3,877            5,725            1,848
2010           3,257            5,352            2,095
2011           3,227            5,509            2,282
2012           3,018            5,609            2,591
2013           3,116            5,650            2,534

Source: US Census Bureau, Public education finances series

Public education advocates expectedly seized on this month’s Census Bureau report to lament the state of the state’s commitment to K-12 schools.

“(Policymakers) use the argument that we had tough economic times, but so did a lot of the other states,” said Chuck Essigs, a lobbyist for the Arizona Association of School Business Officials and an expert on school finance.

But others insist that the true indicator is performance, and they point out that students from states that spend less overall than Arizona actually perform better on national tests. Arizona was dead last in state-only resources, but was No. 48 overall, counting all resources. It bested Idaho and Utah, whose students have traditionally done well on tests. Both states’ students have topped Arizona’s pupils in 4th grade reading and math. In fact, Arizona scored lower than the national average, based on 2013 National Assessment of Educational Progress data.

“My biggest concern is student performance,” said Rep. Paul Boyer, who chairs the House Education Committee and who supports more money for schools. “Now, funding is a necessary but not a sufficient condition for that.”

Not just about the rankings

Pearl Chang Esau, who leads the nonprofit Expect More Arizona, said additional funding is essential – and not just because of the state’s low rankings.

“In Arizona, we need to eliminate the glaring educational attainment gap that exists between low-income students and their wealthier peers,” she said. “We need to make Arizona a place where we can attract and retain highly effective teachers. We need to make sure all children are critical thinkers and can attain a degree or industry credential, because most jobs in Arizona will require this. It’s not just about rankings. It’s about the fact that resources in Arizona’s classrooms have not been sufficient to attain these goals, and additional funding is a necessary means to achieving them.”

Burdick, the Cave Creek district superintendent, agreed that simply throwing money at a problem isn’t the solution. But she said after years of inadequate support, schools are reaching a “critical point” as districts scrimp by eliminating programs that improve student performance.

She noted that some districts are already considering a four-day work week, class sizes have gotten bigger and schools increasingly turn to extra-curricular activities – such as athletics and music that are aimed at producing well-rounded students – to eliminate.

“We’re basically running out of ideas on how to save dollars,” Burdick said.

Steep drop between 2008 and 2009

Neither Sen. Kimberly Yee, who chaired the Senate Education Committee in 2013 and 2014, nor the panel’s current chairwoman, Sen. Kelli Ward, returned calls to explain the downward trend in per pupil funding.  But Sen. John Kavanagh, R-Scottsdale, blamed the economic downturn.

“One word: Recession,” he said. “I mean we didn’t have (enough) money. We historically had been increasing funding in education. The recession hit. Almost everybody took a hit.”

The trend corresponds to the highs and lows of Arizona’s economic fortunes, but only up to a point.

Census Bureau figures show that the state’s per pupil allocation was inching up, reaching its highest level in FY2008, when it stood at $4,516.

That coincided with the heydays of the real estate market. When that boom turned to bust, state support went downhill quickly.

The steep drop in state-only support ($639 less per pupil) between FY2008 and FY2009 can be directly traced to the Great Recession, which partly validates lawmakers’ claim that the cuts were the direct result of the economic crisis.

Additionally, policymakers swallowed a bitter pill to try and inoculate the schools from the worst. In 2010, Gov. Jan Brewer successfully advocated for a three-year sales tax increase, which brought in $1 billion annually. The bulk of the new revenue went to education.

However, even as revenues started rebounding in FY2010, state support for K-12 per pupil was still dropping. Consider this: Total state revenues in FY2013 stood at roughly $9.2 billion, which was much higher than the FY05 level of $8 billion. But in FY05, state support was $353 more per pupil than eight years later.

Adjusted for inflation, the FY2005 figure would be $4,138 in FY13 dollars.

Funding for K-12 schools remains the single biggest spending item in the budget and its share of the general fund has stood flat at 42 percent between fiscal years 2006 and 2016. But at the same time, the number of K-12 students has grown steadily.

“When you have more students and when you have inflation, that forces (schools) to cut programs” if total spending for schools either remained flat or shrank, Essigs said.

In contrast, the spending share of other large programs grew. Prison spending, for example, now occupies 11 percent of the total budget, up from 8 percent a decade ago.

Spending for prisons jumped by 45.5 percent, Medicaid funding spiked by 22 percent and money for public safety increased by 121 percent in the last 10 years, a period that included days of exponential revenue growth and nights of crippling budget lows.

Meanwhile, money for public schools rose by only 9.4 percent during the same period, not nearly enough to keep up with inflation and the rising number of students. What’s troubling, school finance experts say, is that the K-12 budget lags behind enrollment growth.

A discrepancy in numbers

Boyer pointed out that the U.S. Census Bureau and Arizona’s Joint Legislative Budget Committee came out with two significantly different numbers when counting state-only funds for K-12 education, and that’s why he believes the federal data is incomplete.

JLBC’s per pupil funding from the state is much higher than the Census Bureau’s figure.

JLBC US Census Difference
2013 $3,962 $3,116 $846
2012 3,948 3,018 930
2011 3,885 3,227 658
2010 4,409 3,257 1,152
2009 4,580 3,877 703
2008 4,951 4,516 435
2007 4,657 4,335 322
2006 4,303 3,619 684

Sources: US Census Bureau, Joint Legislative Budget Committee

But even JLBC’s data broadly tracks the main conclusions of the Census Bureau report, which is that state support for education funding has shrunk following the Great Recession, while money for agencies, notably corrections, soared.

As adjusted for inflation, state support for public schools stood at $3,422 in FY2013, according to JLBC.

It was $4,303 in FY06 – a difference of $881.

JLBC’s measure of per pupil funding began inching up in FY14 and by FY15 it stood at $3,529. But still, that figure is $774 lower than in the pre-recession FY06.

Actual numbers Inflation-adjusted State revenues
2015 $4,216 $3,529 $9,347,500
2014 4,138 3,512 9,381,300
2013 3,962 3,422 9,559,500
2012 3,948 3,477 9,066,700
2011 3,885 3,462 8,378,000
2010 4,409 3,961 7,843,800
2009 4,580 4,194 8,248,500
2008 4,951 4,654 10,451,100
2007 4,657 4,512 10,897,500
2006 4,303 4,303 9,923,700

Sources: Joint Legislative Budget Committee

The long-term trends

A two-decade review of the data yielded a more nuanced picture for K-12 spending in Arizona.

Counting only state resources, the spending gap between the U.S. average and Arizona began widening in the late 1990s before narrowing in the early 2000s.

Then in 2008, it stood again at 78 percent of the national average, the same as in 1993.

But the economic crisis obliterated those gains and the spending gap widened once more. This time, it was worse: By 2013, state-only resources for K-12 in Arizona were only 55 percent of the national average. In actual numbers, the difference stood at $2,534, having widened by more than 300 percent in 20 years.

Kavanagh, who chaired the House Appropriations Committee during the dark economic years, said money for schools will increase as revenues flow better. Currently, the state still spends more than what comes in.

“We were being conservative and rational. When you have a big shortfall ahead, you don’t spend more money. Once the future shortfall is taken care of, then we can begin restorations,” he said.

When asked to explain why money for prisons, welfare and health care rose while K-12 money fell, Kavanagah said the spending is driven by formula and population growth.

Finally, when asked which he would fund more, public education or public safety, he replied: “Public safety always comes first because if you’re dead, you can’t get a good education.”

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