Inflation and School Funding: Why Do Districts Need More Money?

Inflation and School Funding: Why Do Districts Need More Money?

In an blog post from August, I presented information from the Governor’s Budget Division and Kansas State Department of Education indicating that while K-12 education funding has increased since Governor Brownback took office and is higher than the pre-recession year of 2009, when adjusted for inflation funding has been flat for the past four years and educational operating budgets, which exclude pensions contributions, capital cost, debt service and food service programs, have been declining since 2009.

This has prompted several questions. Why use 2009 as a base year? How has school funding compared to inflation over a longer term? If school funding over the long-term has increased more than inflation, why do so many school leaders believe funding is inadequate?

First, I used 2009 as the base year because that was the earliest year referenced in new documents from the Kansas Division of the Budget.

Second, choosing a different year will give a different result. Another analysis using the same methodology used in my blog indicates school funding has increased at least $339 million MORE than inflation since 2005, using my definition of educational program budgets.

A $339 million increase on a $3.3 billion base is about 10 percent. Spread over 10 years, that is an average of about 1 percent per year more than inflation. In fact, I have found that the annual per pupil district operating budgets (general funding, special education state aid, local option budgets and federal aid, but excluding KPERS pensions, buildings, equipment, debt service and other local revenues) have averaged about 1 percent more than inflation all the way back to 1990.

The key word, however, is averaged. I suspect most families who experienced a jump in income between 2005 and 2009 but took a pay cut for several years during the recession and haven’t had a pay increase that exceeded inflation in three or four years would not feel like they were getting ahead, especially if they have more family members to care for. This is exactly the situation of Kansas school districts.

School funding did increase significantly between 2005 and 2009. Remember, 2005 was the one point in the history of the state when the Kansas Supreme Court ruled that school funding was too low to provide constitutionally suitable education. If 2009 funding was unusually high, 2005 funding was constitutionally too low. But school operating budgets were cut in 2010, 2011 and 2012, and have been essentially flat every year since. (I also note in the blog that other parts of school districts budgets, i.e. retirement contributions, building and equipment costs and food service, have gone up in recent years, which contributes significantly to total funding increases.)

Why do school leaders believe more money is needed, if over a 10-year period school funding is still ahead of inflation? To answer that question, we need to consider changes in educational costs.

First, by far the largest part of school operating expenditures is salaries and benefits, which tend to increase faster than inflation. According to the U.S. Bureau of Labor Statistics, private sector annual compensation has increased on average about 0.25 percent more than the consumer price index annual for the past 10 years. Districts have to increase salaries more than inflation simply to remain competitive with private sector employers.

Second, districts are educating more students. The number of full-time equivalent students increased from 441,868 to 460,848 since 2005, or 0.43 percent per year on average. Adding 0.25 percent for salaries and 0.43 percent for enrollment growth leaves just about one-third of 1 percent budget growth annually for “improvements” in operating education programs.

Third, “inflation” implies the change in the cost of getting the same product. For example, how does the cost today compare to cost 10 years ago for the same gallon of gas or a loaf of bread? Kansans are getting a better “product” from their public schools. Key educational indicators have increased at a rate equal to or higher than the 0.3 percent average funding growth left after subtracting inflation, net salary increases and enrollment growth.

  • The percent of students scoring at basic for Grades 4 and 8 reading and math on the National Assessment of Educational Progress increased from 76.0 to 79.4 between 2003 and 2013 – an average of 0.34 percent per year.
  • The percent of students scoring at proficient on the National Assessment of Educational Progress increased from 35.8 to 40.4 – 0.46 percent per year.
  • Percent of students tested by ACT meeting all four college-ready benchmarks (English, Math, Reading and Science) increased from 26 percent to 31 percent between 2006 and 2014: – an average of 0.6 percent per year.
  • The percent of students graduating “on time” from high school increased from 76.9 to 85.0 between 2003 and 2012 – an average increase of 0.9 percent per year.

On each of these indicators, the average annual growth improvement in student performance – though less than 1 percent per year – was equal to or greater than the average increase in educational program funding after adjusting for inflation, comparable private sector salary growth, and student enrollment growth. Remember, most of the funding increase occurred when this year’s high school seniors were in elementary schools. Yet it is often argued that Kansas educational performance has not increased fast enough to meet student needs or justify additional funding.

Not only have the outcomes changed, the students that are striving to achieve these outcomes have changed even more dramatically. For example, the percentage of school-aged children living below the poverty line increased from 12.7 percent in 2007 to 17.2 percent in 2013. The number of Hispanic student increased from 12.0 percent in 2007 to 17.8 percent in 2013. In both cases, this was a 50 percent increase in the number of students.

The percentage of students requiring English Language Learner programs increased even more, almost doubling from 5.5 percent in 2005 to 10.0 percent in 2013; and the percent of students on free or reduced meals increased from 38.5 percent in 2005 to 49.6 percent in 2013. Numerous state and national studies have found these students have more difficulties meeting academic standards for success.

Why do Kansas schools need more money if funding has exceeded inflation? Because employment costs, total enrollment and special needs students and student achievement goals are all increasing more than inflation.