The ReThink Series: Idaho Education Funding

Five questions about education funding in Idaho.

The ReThink Series Knowledge Base of Education Facts

Inside: .....................................

Idaho’s State Board of Education and business leaders have embraced a goal that 60 percent of Idahoans hold a postsecondary degree by 2020.

Here are five insights into Idaho’s investment in education.

ReThink Funding / JKAF.ORG // PG 2

Background: As Idaho and the nation recover from the recent recession, economists are looking for the next driver of sustained growth. One solution is to improve education—and worker skills—in an era where advanced technology and a competitive global economy demand a well-educated and highly trained workforce.

One benchmark embraced by Idaho’s State Board of Education and business leaders is that 60 percent of Idahoans hold a postsecondary degree by 2020. This goal is ambitious and will require a considerable improvement in degree attainment levels.

Just how will Idaho do this? To address this from a fiscal perspective, one must review the current level and nature of Idaho’s investment in K12 education.

This fact book addresses essential questions about Idaho’s K12 funding system.

5

FIVE QUESTIONS ABOUT EDUCATION FUNDING IN IDAHO

ReThink Funding / JKAF.ORG // PG 4

Q1:

How much does Idaho spend on K12 schools and how does that compare nationally?

PG ___ 05

Q2:

Where does the money for education come from?

PG ___ 19

Q3:

How does spending differ across Idaho and why?

PG ___ 25

Q4:

How do Idaho schools spend their money?

PG ___ 33

Q5:

Would spending more improve achievement?

PG ___ 37

Q1:

.....................................

How much does Idaho spend on K12 schools and how does that compare nationally?

A: Idaho’s per-student spending is second lowest in the country.

Q1: How much does Idaho spend on K12 schools and how does that compare nationally?

A:

Idaho’s per-student spending is second lowest in the country.

In 2011—the most recent year interstate comparisons are available— Idaho schools spent $1.9 billion for ongoing operations.* That amounts to $6,821 per enrolled student. Only Utah spent less per student.

A couple of factors explain Idaho’s ranking.

*Current (or ongoing operational) expenditures are supported by local, state, and federal revenue. Current expenditures exclude capital outlay, nonelementary/secondary expenditures, and interest payments on debt. Source: Cornman, S.Q. (2013). Revenues and Expenditures for Public Elementary and Secondary Education: School Year 2010–11 (Fiscal Year 2011). U.S. Department of Education. Washington, DC: National Center for Education Statistics. (Hereafter cited as NCES State Fiscal Report, 2011.) Note: NCES current expenditure amounts are not identical to those from the Idaho State Department of Education (SDE) because they include a number of different expenditure categories and institutions.

ReThink Funding / JKAF.ORG // PG 8

2ND TO LAST

LA ST

NOTE

Most of the Mountain West states have per-student spending that is below the national average.

Source: NCES State Fiscal Report, 2011

Virginia

Michigan

United States

Minnesota

Montana

Louisiana

North Dakota

Ohio

Nebraska

Illinois

Hawaii

$15K—

Wisconsin

West Virginia

Delaware

Maine

Pennsylvania

New Hampshire

Maryland

Massachusetts

Vermont

Rhode Island

Wyoming

Connecticut

Alaska

New Jersey

New York

$20K—

U.S. Average = $10,658 / student

$10K—

$5K—

$—

Utah

Idaho

Oklahoma

Arizona

Mississippi

North Carolina

Nevada

Tennessee

Texas

Alabama

Colorado

South Carolina

South Dakota

Florida

California

Kentucky

New Mexico

Indiana

Georgia

Missouri

Arkansas

Oregon

Washington

Iowa

Kansas

United States K12 Expenditures per Student ReThink Funding / JKAF.ORG // PG 10

///2011

Idaho = $6,821 / student

Q1: How much does Idaho spend on K12 schools and how does that compare nationally?

A:

Idaho’s small economy, relative to its number of school-age children, puts a natural limit on spending.

At the root of school finance are three important figures: 1. The amount of total personal income in the state (total size of the economic pie) 2. The population of school-age children 3. The average number of children per family Idaho has more school-age children relative to income-producing adults than any other state except Utah and Alaska. This contributes to Idaho’s low ranking in total personal income per school-age child.

Of the 14 highest-ranking states, all but two—Alaska and Wyoming— have child-per-family statistics that are below the national average.

Connecticut

Arizona

Utah

Idaho

Mississippi

New Mexico

Arkansas

$300K—

Georgia

$350K—

Indiana

Kentucky

South Carolina

Michigan

Alabama

Texas

North Carolina

Nevada

Ohio

Oklahoma

Tennessee

West Virginia

Louisiana

Missouri

Montana

Kansas

Oregon

Wisconsin

Iowa

Nebraska

Maine

Illinois

California

Alaska

Delaware

South Dakota

Florida

Minnesota

Colorado

Pennsylvania

Washington

Vermont

Rhode Island

Hawaii

New Hampshire

Virginia

Wyoming

Maryland

New Jersey

North Dakota

New York

Massachusetts

ReThink Funding / JKAF.ORG // PG 12

Total Personal Income per School-age Child, Ages 5-17

///2011

Most Mountain West states have relatively small economies.

NOTE

$250K—

$200K—

$150K—

$100K—

$50K—

$—

Sources: The Urban Institute—Brookings Institution Tax Policy Center, and 2011 five-year ACS estimates

Q1: How much does Idaho spend on K12 schools and how does that compare nationally?

A:

Idaho’s K12 spending as a share of the state’s economy has declined in recent years.

Within the state’s relatively small economy, Idaho policymakers and taxpayers decide what share to spend on K12 schools. That share has declined recently.

K12 spending as a share of total personal income amounted to 3.5 percent in Idaho and 4.0 percent in the United States in 2011.

Idaho’s 3.5 percent rate is now as low as it was during the late 1970s.

ReThink Funding / JKAF.ORG // PG 14

K12 Current Expenditures as a Share of Total Personal Income, Idaho vs. U.S. /// 1977-2011

5%

4%

U.S. Idaho

3%

2%

1%

0%

1977

1979

1981

1983

1985

1987

1989 1991

1993

1995

1997

1999 2001 2003 2005 2007 2009 2011

Source: The Urban Institute—Brookings Institution Tax Policy Center

Q1: How much does Idaho spend on K12 schools and how does that compare nationally?

A:

Idaho’s spending as a share of its economy is similar to several other states in the region.

Idaho’s three regional peers in school finance, Utah, Nevada, and Arizona, have small economies relative to their school-age population and spend similar shares on K12 education.

Alaska

Florida Hawaii

South Dakota

7%—

Arizona

Colorado

Washington

Tennessee

North Dakota

Massachusetts

Oklahoma

California

Idaho

North Carolina

Virginia

Nevada

Utah

Maryland

Kansas

Missouri

Minnesota

Oregon

Indiana

Iowa

Connecticut

Texas

United States

Illinois

Kentucky

Mississippi

Nebraska

Delaware

Alabama

Pennsylvania

Louisiana

South Carolina

Montana

New Hampshire

Georgia

Ohio

Maine

Michigan

Wisconsin

Rhode Island

Arkansas

New Jersey

West Virginia

New Mexico

New York

Wyoming

Vermont

ReThink Funding / JKAF.ORG // PG 16

K12 Current Expenditures as a Share of Total Personal Income /// 2011

6%—

5%—

4%—

3%—

2%—

1%—

0%—

Source: The Urban Institute—Brookings Institution Tax Policy Center

EDUCATION IS THE THE GOLDEN DOOR

KEY TO UNLOCK OF FREEDOM. —George Washington Carver

Q2:

.....................................

Where does the money for education come from?

A: State-collected revenue plays a larger role in Idaho K12 funding than in most states.

Q2: Where does the money for education come from?

A:

State-level revenue—from income and sales tax— supports the majority of Idaho’s K12 budgets.

In 2011, state revenue represented 63 percent of Idaho’s total K12 revenues— compared with a 44 percent U.S. average.

From 1997 to 2006, the relationship between state, local, and federal revenue in Idaho’s K12 system was relatively stable. In 2006, the Idaho Property Tax Relief Act substituted a portion of Idaho’s Maintenance and Operations property tax levy with a sales tax increase. This change had two impacts on finance: First, it eliminated the portion of property taxes that had been equalized across low- and high-property-wealth districts, thus affecting the equity of funding across districts.

Second, it shifted funding from a relatively stable revenue source to a less stable one. In hard economic times, property taxes are more stable than sales taxes.

ReThink Funding / JKAF.ORG // PG 22

Idaho K12 Revenues by Type ($ millions) The Property Tax Relief Act of 2006 reduced local property tax revenues and increased state-level support.

/// 1997-2011

The recession of 2007-09 resulted in a drop in income and sales tax revenues from the state, as well as a temporary increase in federal funding.

$1,600 Property Tax Relief Act of 2006

$1,400

$1,200

$1,000 Recessionrelated effects

$800

$600

$400

$200

$0 1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

Source: NCES State Fiscal Reports

Q2: Where does the money for education come from?

A:

Idaho’s revenue relies on fluctuating income and sales taxes, contributing to volatility in funding.

Idaho ranked 16th for volatility in year-to-year K12 funding from 1997 to 2011.

The state’s K12 revenue mix contributes to the instability. Idaho school funding relies more heavily on volatile income and sales taxes, and less on property taxes, than the typical state.

In a review of year-to-year changes in Idaho K12 spending, it is easy to spot the effects of recessions—in the early 1980s, early 1990s, early 2000s, and post-2009.

Spending shows a boom-bust pattern consistent with business cycles. The expiration of federal stimulus revenue explains, in part, the most recent dip in spending.

ReThink Funding / JKAF.ORG // PG 24

Year-to-year Change in Idaho’s K12 Current Expenditures /// 1978-2011 State funding formula revisions •••

20% Recession effects appear 1-2 years postrecession

15%

10%

Expiration of federal stimulus funding

5%

0% 1978

-5%

1980

1982

1984

1986

1988

1990

Recession

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

Annual change

Sources: NCES State Fiscal Reports and The Urban Institute—Brookings Institution Tax Policy Center

Q3:

.....................................

How does spending differ across Idaho and why?

A: On average, large school districts have lower per-student spending than small districts.

Q3: How does spending differ across Idaho and why?

A:

Small school districts spend considerably more per student because costs are spread over fewer students.

Median enrollment of Idaho districts and charter schools is about 465, so half are larger and half are smaller. In small districts, the costs of core district administration—a superintendent, payroll clerk, human resource manager, information technology specialists, etc.—are spread over a small number of students.

ReThink Funding / JKAF.ORG // PG 28

Average K12 Spending per Student,

by Idaho School District and Charter School Enrollment Quartiles /// 2011-2012*

SM DISTRICTS /// 141

AVG.

MED DISTRICTS /// 337 LRG DISTRICTS /// 851 XL DISTRICTS /// 5,862

STUDENTS

AVG.

AVG.

STUDENTS

....................$10,320

.............................................$8,512

STUDENTS

.................................................$8,127 AVG.

STUDENTS

..............................................................$7,083

*Charts to this point relied on 2010-2011 data, the most recent available for interstate comparisons.

Charts in this section rely on 2011-2012 data, the most recent available from Idaho SDE.

Source: Idaho SDE

Q3: How does spending differ across Idaho and why?

A:

Idaho school districts can boost spending with local tax increases.

State and federal revenue provides the foundation for Idaho school budgets. The state distributes resources based primarily on average daily attendance and associated staffing needs. Federal government resources are mainly tied to poverty rates.

Idaho’s local school districts can add to state and federal resources with regular Maintenance and Operations, and supplemental override property tax levies. High-property-wealth districts can pass supplemental levies without limitation, and they are not required to share resulting revenues through equalization.*

*The Property Tax Relief Act of 2006 eliminated the portion of M&O property taxes that had been equalized across low- and high-property-wealth districts.

ReThink Funding / JKAF.ORG // PG 30

Revenue per Enrollee, by Level of Government, Selected Large Districts, Idaho

Local / Other

/// 2012

State

Federal

$16K — $14K — $12K — $10K — $8K — $6K — $4K — $2K — $0 — Boise Meridian Independent Joint

Nampa

Pocatello

Coeur d’Alene

Idaho Falls

Bonneville Joint

Twin Falls

Blaine County

Vallivue

Note: Does not include charter schools. Includes general M&O, special revenue, and food service revenues. / Source: Idaho SDE

Q3: How does spending differ across Idaho and why?

A:

By one measure, Idaho’s K12 finance system ranks as the least equitable in the country.

Education Week’s Wealth Neutrality Index measures the relationship between levels of property wealth in local school districts and perstudent spending. Because Idaho’s school districts have the ability to boost per-student spending through unequalized property tax revenues, Idaho’s score was the highest—most inequitable—in the nation in 2011.

0.0

-0.1 Idaho

Maryland South Carolina

Virginia Mississippi

Pennsylvania Louisiana

Michigan Illinois

Rhode Island

0.3

Georgia New Hampshire

0.4

Colorado Florida

/// 2011

Missouri Alabama

Education Week’s Wealth Neutrality Scores: Relationship between District per-Student Funding and Local Property Wealth

Delaware Maine

Washington Montana

Oregon Tennessee

Texas Vermont

Arkansas Arizona

New York Ohio Minnesota

Nevada Indiana New Mexico South Dakota California Iowa Oklahoma New Jersey North Carolina Kentucky North Dakota Massachusetts Wisconsin Connecticut

Kansas

Nebraska Alaska West Virginia Wyoming Utah

ReThink Funding / JKAF.ORG // PG 32

Higher scores indicate a stronger relationship between districtlevel wealth and per-student spending.

•••

0.2

0.1

-0.2

-0.3

Source: Education Week Research Center, 2014

Q4:

.....................................

How do Idaho schools spend their money?

A: Idaho’s K12 spending mix matches national norms and has not changed much over time.

Q4: How do schools spend their money?

A:

Idaho’s K12 spending mix matches national norms and has not changed much over time.

A breakdown of Idaho’s spending per student is nearly identical to the U.S. mix for each category.* For example, 61 percent of spending per student in Idaho went to instruction in 2010. The U.S. average was also 61 percent.

From 1997 to 2010, overall spending per student in Idaho grew by 3.7 percent annually. Most key categories increased at a similar rate.

*Instruction expenditures include classroom instruction (including teachers and teaching assistants), libraries, in-service teacher training, curriculum development, student assessment, and instruction technology. Student support services include attendance and social work, guidance, health, psychological services, speech pathology, and audiology.

ReThink Funding / JKAF.ORG // PG 36

Share of per-Student Spending

by Spending Type, Idaho vs. U.S. /// 2010

100%—

2% ......Other Support Services...... 3% 2% .....General Admin. Support..... 2% 4% ...Instructional Staff Support... 5% 5% ......Student Transportation..... 4% 5% ...............Food Services............... 4% 6% .......School Administration....... 5% 6% .....Student Support Services..... 6% 9% ...Operations & Maintenance... 10% 61% .................Instruction................. 61%

0% —

Note: Represents current expenditures. / Source: NCES, National Public Education Financial Survey Data

Q5:

.....................................

Would spending more improve achievement?

A: Higher per-student spending does not guarantee higher student achievement.

Q5: Would spending more improve achievement?

A:

Higher per-student spending does not guarantee higher student achievement.

Charts: Share of Idaho students with proficient or advanced scores in reading and math, ISAT, by district-level per-student spending. /// 2012

ReThink Funding / JKAF.ORG // PG 40

Reading

% with Proficient or Advanced Scores in Reading

95%—

Kimberly

Lake Pend Oreille

Sugar-Salem

85%—

Blaine County

Moscow

Preston

Mountain View Kellogg

Jerome

Teton County

Payette

75%—

65%—

| $4K

| $6K

| $8K

| $10K

| $12K

| $14K

| $16K

| $18K

Current Expenditures per Student Note: Each dot represents a district with at least 1,000 students. / Source: Idaho SDE

Q5: Would spending more improve achievement?

A:

In Idaho’s large school districts, there is no clear relationship between per-student spending and achievement.

Similar patterns emerge at the national level. From 1960 to 2005, K12 per student spending nearly quadrupled, adjusting for inflation. Student-teacher ratios fell, the share of teachers with a master’s degree increased, and median teacher experience rose.* And yet the U.S. has not experienced a comparable gain in student achievement or graduation rates.

These broad trends have led to many studies attempting to identify how schools can use their resources to become more productive or increase outputs for a given level of inputs.**

*See Hanushek, E.A. & Lindseth, A.A. (2009). Schoolhouses, Courthouses, and Statehouses: Solving the Funding-Achievement Puzzle in America’s Schools. Princeton University Press, pp. 45-47. **See, for example, Mishel, L. and Rothstein, R. (editors). (2002). The Class Size Debate. Economic Policy Institute.

ReThink Funding / JKAF.ORG // PG 42

Math

% with Proficient or Advanced Scores in Math

95%—

Sugar-Salem

Lake Pend Oreille Shelley

85%—

Blaine County

Moscow

Preston Mountain View

75%— Kellogg

Kuna

Teton County

Payette 65%—

| $4K

| $6K

| $8K

| $10K

| $12K

| $14K

| $16K

| $18K

Current Expenditures per Student

Note: Each dot represents a district with at least 1,000 students. / Source: Idaho SDE

Conclusion As Idaho strives to raise high school and postsecondary completion rates, the role of K12 funding will remain in the spotlight. This fact book seeks to provide a common foundation for that discussion.

ReThink Funding / JKAF.ORG // PG 44

First, Idaho ranks below all but one state in K12 spending per student. Why? Because the state’s economy is small relative to its number of children. Idaho has the third highest child-per-family ratio in the nation. Compared to other states, Idaho has more students dividing up a relatively small economic pie.

Second, it follows that if policymakers seek more resources for K12 education, income growth is a critical first step. If Idaho fails to grow its economy relative to the population of school-age children, the state will probably continue to rank low on per-student spending.

Policymakers face a “chicken or egg” dilemma. Should Idaho put a higher proportion of the state’s available dollars into education in the hope that it will improve the economy? Or should Idaho focus on funding activities that will grow the economic pie so that there will be more dollars for education?

Or both?

ReThink Funding / JKAF.ORG // PG 46

If Idaho elects to boost per-student spending, how would schools make the new money matter? Evidence and experience demonstrate that additional dollars alone do not guarantee improved results. Spending more money the same way—business as usual—has shown limited success elsewhere.

FYI The ReThink Series is a quarterly report of education facts produced by the J.A. and Kathryn Albertson Foundation. This issue is in partnership with ECONorthwest, an economic, finance and planning consultant.

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