September 10, 2014
As is typical at the beginning of any school year, education funding has received increased attention as of late. States have begun to once again increase funding to elementary and secondary education following cuts brought upon by the national recession. While states reduced K-12 general fund spending by a combined $18.7 billion in fiscal 2009 through fiscal 2010, states increased K-12 general fund spending $33.1 billion from fiscal 2011 through fiscal 2014. In addition, governors’ proposed increasing K-12 general fund spending by $10.9 billion in fiscal 2015, the fifth straight yearly increase.
Additionally, elementary and secondary education has remained the largest area of general fund spending. K-12 spending has represented approximately 35 percent of overall general fund spending before, during, and after the economic downturn, significantly higher than the amount of general fund spending directed towards Medicaid. However, Medicaid does comprise a larger percent of total state expenditures when federal funds are included (in fiscal 2013 Medicaid represented 24.4 percent of total state spending while K-12 was 19.8 percent).
As was true with other areas of state spending, elementary and secondary education experienced significant declines during the past recession. In fiscal 2009 and fiscal 2010, elementary and secondary education general fund spending (the largest fund source of state expenditures) declined 2.3 percent and 5.7 percent respectively, marking the first declines in K-12 spending since NASBO began collecting data in its State Expenditure Report in 1987. The declines in elementary and secondary education spending were notable because governors and legislators historically have prioritized K-12 and are reluctant to make cuts. State revenues declined so rapidly and significantly during the downturn that most states were forced to make reductions to K-12 to ensure budgets were balanced. The cuts in elementary and secondary education spending were slightly less than some other program areas backed by general fund revenues; overall general fund spending declined 2.9 percent in fiscal 2009 and 6.5 percent in fiscal 2010.
Total state expenditures (general funds, other state funds, bonds, and federal funds combined) on elementary and secondary education were more of a mixed picture during the downturn. Total state spending on K-12 did not decline in fiscal 2009 due to the influx on federal Recovery Act dollars, but did decline in fiscal 2010 as cuts in K-12 general fund spending outweighed the additional federal dollars. Total state expenditures on K-12 rose once again in fiscal 2011, but declined in fiscal 2012 as Recovery Act funds expired. States received over $15 billion less K-12 Recovery Act dollars in fiscal 2012 compared to fiscal 2011.
Also, according to the federal Bureau of Labor Statistics (BLS), states and localities have begun restoring education positions, although not nearly to the levels where they were before the recession. State and local education employment declined by 297,200 positions from August 2008 to August 2012. Since August 2012, state and local education employment has increased by 24,200.
Finally, as noted in NASBO’s 2014 Summary of State of the State Addresses, governors highlighted the importance of education in their State of the State speeches, discussing the need to restore previous cuts, expand prekindergarten programs, and invest more in workforce training. The National Governors Association (NGA) also found that education was the most popular topic in State of the State speeches.
The recent increases in elementary and secondary education spending, the fact that K-12 remains the largest area of general fund spending, the current increases in education positions, and the emphasis on K-12 in State of the State speeches demonstrates that elementary and secondary education remains a priority for state officials.