Economic Perspectives on State and Local Taxes
-
Upload
kenyon-perry -
Category
Documents
-
view
21 -
download
3
description
Transcript of Economic Perspectives on State and Local Taxes
![Page 1: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/1.jpg)
January 21st Lincoln Institute
Michael Griffith
Senior Policy Analyst
Education Commission of the States
![Page 2: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/2.jpg)
The only nationwide education interstate compact
Founded in 1965 to enlighten, equip and engage education policy makers
53 member states, territories and the District of Columbia
Web Site: www.ecs.org
2
![Page 3: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/3.jpg)
Education spending – A national picture
The increased federal role
National Funding Problems
Solutions
3
![Page 4: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/4.jpg)
Average Spending Per Pupil
Adjusted for Cost of Living
National Average $10,506 $10,506
Rhode Island $18,729 (1) $15,389 (2)
Vermont $15,466 (4) $13,810 (3)
Maine $13,978 (7) $12,489 (7)
Massachusetts $13,804 (8) $12,357 (10)
New Hampshire $13,112 (10) $11,738 (13)
Connecticut $14,472 (6) $11,236 (18)
4
![Page 5: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/5.jpg)
Federal State Local
National 9.4% 47.1% 43.5%
Connecticut 6.7% 37.9% 55.4%
Maine 10.8% 38.5% 50.7%
Massachusetts 7.9% 37.6% 54.4%
New Hampshire 5.4% 37.0% 57.5%
Rhode Island 8.2% 40.5% 51.3%
Vermont 8.0% 86.5% 5.5%
5
![Page 6: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/6.jpg)
In the past three years all states have made some cuts in education spending.
Number of States that made cuts to their K-12 primary funding formula:◦FY 2008-09: 20 states◦FY 2009-10: 30 states◦FY 2010-11: 38 states
6
![Page 7: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/7.jpg)
During the last four economic downturnsState funding tended to decrease as a percentage of
total K-12 education fundingLocal funding tended to increase as a percentage of the
total, andFederal funding remained flat or slightly increased
A greater reliance on local funding creates greater inequity between the “haves” and the “have-nots”
7
![Page 8: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/8.jpg)
8
![Page 9: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/9.jpg)
American Reinvestment & Recovery Act ($100 billion)Funding: Early Learning ($2 bill) K-12 ($70 bill) Higher Ed. ($28 bill)
Education Jobs Fund (Edu-Jobs)($10 billion)States must distribute the funding in FY 2010-11 but
districts have until FY 2011-12 to spend it.
9
![Page 10: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/10.jpg)
Fiscal Year Fiscal Year 2007-08 2010-11*
State 47.9% 40.3%
Local 43.3% 44.0%
Federal 8.8% 15.7%
Each 1% swing in funding represents $5.7 billion
*Estimated
10
![Page 11: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/11.jpg)
11
NCLB
ARRA &Edu - Jobs
![Page 12: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/12.jpg)
Pensions
Health Care
12
![Page 13: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/13.jpg)
Teacher Pensions: Pew estimates that there is a $500 billion shortfall nationwide.
State Liabilities (2008)◦ Connecticut $15.8 billion◦ Maine $ 2.7 billion◦ Massachusetts $21.8 billion◦ New Hampshire $ 2.5 billion◦ Rhode Island $ 4.3 billion◦ Vermont $ 0.5 billion
Funded below 80% level
13
![Page 14: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/14.jpg)
Health Care Costs:
◦Account for 6% to 8% of all K-12 spending
◦These costs are increasing by 10% to 15% each year
14
![Page 15: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/15.jpg)
What We Need are Solutions!
15
![Page 16: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/16.jpg)
Other than cutting benefits what can states do?
Move new employees to defined contribution plans – like 401k plans
Create hybrid systems
Increase vesting time for new employees
Close loopholes in the system
16
![Page 17: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/17.jpg)
What can state’s do other than cutting services or increasing employee contributions?
Move to joint purchasing:◦Michigan: All school districts must now
participate in the state’s health care pool
17
![Page 18: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/18.jpg)
Salaries & benefits drive education costs:◦ 65% goes to educator salaries & benefits◦ 15% go to other staff salaries & benefits
Benefits alone account for 20% of education spending
Total administrative costs account for 7.5%
Transportation costs account for 4.2%
Instructional supplies (including textbooks) 3.3%
18
![Page 19: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/19.jpg)
180 School Days Average Class Size of 25
175 School Days Average Class Size of 25
180 School Days Average Class Size of 26
Number of Students 1,500 1,500 1,500
Average Class Size 25 25 26
Number of Days 180 175 180
Total Teaching Costs $4,073,925 $3,960,760 $3,917,236
Total Savings $113,165 $156,689
Percentage Savings 2.8% 3.8%
19
![Page 20: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/20.jpg)
Promote school district purchasing co-ops◦ A study in Delaware found that if school districts pooled their
purchasing power, they could reduce their costs from 8% to 14%.
Encourage districts to work together to educate high-need special education students. ◦ Studies have found that this can result in both improved quality of
education and reduce costs.
20
![Page 21: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/21.jpg)
Texas: Combining services The state is providing financial incentives to districts
that are willing to combine services
School district consolidation Maine has been working on this over the past 3 yearsKansas, Michigan and other states are currently
reviewing this option
Iowa provides financial incentives to districts to consolidate
21
![Page 22: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/22.jpg)
Some districts are moving to a four-day school weekECS has found that 120 districts (less than 1% of total)
make use of a four-day weekDistricts who move to a four-day week tend to save less than
3%
In 2009-10 Hawaii shortened it’s school year by 15 daysTeachers are donating 6 days in order to eliminate 15
furlough daysBanks provided funding to schools to help them bridge the
gap
22
![Page 23: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/23.jpg)
Adopting New Funding SystemsOhio and Rhode Island in 2010Pennsylvania in 2009
All three states took the opportunity to streamline their systems
New York has recently allowed districts greater flexibility in spending
23
![Page 24: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/24.jpg)
California: Changing Kindergarten Start Date◦ California is pushing date from Dec 2nd to Sep 1st
◦ This will reduce Kindergarten enrollment by 100,000
◦ State grants will be made available for Early K programs
◦ This change will produce $700 million in savings
24
![Page 25: Economic Perspectives on State and Local Taxes](https://reader033.fdocuments.in/reader033/viewer/2022052603/56812c94550346895d91412f/html5/thumbnails/25.jpg)
Traditionally it takes 18 to 24 months for state budgets to recover after a recovery begins
Most economist agree that a recovery started in 3rd or 4th quarter of last year
If this recovery holds education budgets will begin to see improvement in mid to late 2011
25