Informed Decisions 2020 Election Brief

Election Brief

September 8, 2020

Table of Contents

2We Are Utah

3Issue Brief

Economic Insights: COVID-19 and the Utah Economy

7Issue Brief

Utah's Housing Shortage: Rising Prices and COVID-19

9Issue Brief

Education Funding: Amending the Utah Constitution

12Informed Decisions 2020 Calendar

September 2020

Dear Utah Voter,

We face significant challenges in 2020 – a global pandemic, an economic recession, racial and ethnic

strife, and, for many, a season of discontent. For all of these reasons and more, the 2020 election is

among the most important in a generation.

This year, Utah voters will choose a president, four members of Congress, a governor, a host of other

state and local officials, and vote on seven constitutional amendments. Our vote is our voice, and it’s

critical our voices are heard this election year.

In this INFORMED DECISIONS™ election brief, we share insights in three areas of critical concern to

Utahns: education funding, housing affordability, and the impact of COVID-19 on Utah’s economy. We

will also host forums and candidate discussions as a companion to this research.

Together, the Hinckley Institute and Gardner Institute, combine our expertise and energies to

analyze, convene, and ultimately, help Utahns make informed decisions. Thanks for your interest.

Sincerely,

Natalie GochnourAssociate Dean, David Eccles School of BusinessDirector, Kem C. Gardner Policy Institute

Jason P. PerryVice President of Government RelationsDirector, Hinckley Institute of Politics

12Informed Decisions 2020 Calendar

I n f o r m e d D e c i s i o n s 2 0 2 0 1

Utah surpassed 3.2 million residents in 2019 and continues to be among the most rapidly growing states in the nation. Between 2018 and 2019, Utah was the 4th fastest growing state, ranking behind intermountain neighbors Idaho, Nevada, and Arizona. For the entire decade, Utah has had the most rapidly growing population. Since 2010, the state has added approximately 456,000 residents. Over 72% of this growth was concentrated along the Wasatch Front (Davis, Salt Lake, Utah, and Weber counties).

Statewide, the population is projected to increase to 5.8 million by 2065. Utah County is projected to have the largest numeric increase to population, resulting in a population of 1.6 million by 2065. This will result in very similarly sized populations in both Salt Lake and Utah counties by 2065. Counties neighboring the Wasatch Front (Wasatch, Juab, Morgan, and Tooele) are also projected to see significant population growth over the next 50 years.

While natural increase (births minus deaths) was the dominant contributor to population growth between 2010 and 2019, net migration was consistently positive and is responsible for a third of the state’s population growth since 2010. Dynamics contributing to population change include a relatively strong job market, a declining total fertility rate since the Great Recession, younger people postponing the formation of new households and having children, and an aging population. In 2015, 1 in 10 Utahns was over the age of 65. By 2065, this share will double to one in five.

Migration also adds to a diversifying population in the state. In the past, foreign-born newcomers to Utah came largely from Latin America. Today, populations from Asia are the largest share of foreign-born entrants to the state. The minority populations (anyone identifying as anything other than non-Hispanic white) in the state contributed about 40% of Utah’s population growth since 2010.

We are Utah

Home to

3,220,262 people

Fastest

growing state since 2010

Fourth fastest growing state,

2018 and 2019

Fourth highest fertility rate at 2.0265

Still Youngest

state in the nation (median age 31.3 years)

Still Largest

household size in the nation (3.12)

30th most populated

state

Sources: Compiled by the Kem C. Gardner Policy Institute based on data from the Utah Population Committee, Census Bureau, and National Center for Health Statistics.

I n f o r m e d D e c i s i o n s 2 0 2 02 I n f o r m e d D e c i s i o n s 2 0 2 0 3

Nearly every facet of Utahns’ economic life, like that of others around the globe, has been upended and altered by the COVID-19 pandemic. Utahns feel the sting of lost jobs and income, insecurity about their economic future, and uncertainty about potential long-term changes impacting the economy. It begs the question, what do voters and candidates need to know to make informed decisions this election year?

Pandemic expert and historian John Barry, author of The Great Influenza, said the most important lesson from the 1918 flu pandemic is to “tell the truth.”1 The truth is Utahns will continue to face significant uncertainty about the spread and economic impact of the COVID-19 virus for the remainder of this year and in 2021.

In the face of this uncertainty, voters and candidates will benefit from understanding four economic insights about COVID-19 and the Utah economy.

Insight #1: The economic impact has been sudden, severe, and uneven. The worst is likely over.

When a 5.7 magnitude earthquake rocked the Salt Lake Valley on March 18, 2020, the reality of the COVID-19 recession was just beginning to take hold. New weekly unemployment insurance claims, which averaged 1,131 in 2019, tallied an alarming 19,591 the week of March 21, 2020, and then commenced with seven consecutive weeks of more than 10,000 new weekly claims.2 By the week of May 2, 2020, Utah reached a peak of 126,192 continuing weekly claims, orders of magnitude higher than the 8,856 average of continuing claims in 2019.3 (Figures 1 and 2)

This sudden and severe impact can be seen visually in the alarming rise in Utah unemployment rates that peaked in April 2020 at 10.4%, and the gut-wrenching contraction in jobs, which on a year-over basis tallied -7.3% in April 2020. Utah’s unemployment rate and job contraction have moderated since then at 4.5% and -1.8%, respectively, in July. (Figures 3 and 4)

The job contraction has also been uneven, affecting industries differently. Utah’s leisure and hospitality industry has, by far, suffered the greatest contraction. Year-over job change in July 2020 tallied -19.0%, marking the elimination of over 32,000 hotel, restaurant, and other tourism-related jobs. Utah’s natural resources industry also experienced significant job declines at -11.5%. (Figure 5)

In addition to an uneven effect on industries, there has been an uneven effect on different populations, with Hispanic women, immigrants, young adults and those with less education

Economic Insights: COVID-19 and the Utah EconomyBy Natalie Gochnour, Director, Kem C. Gardner Policy Institute

Figure 1: Utah New Weekly Unemployment ClaimsMarch 21, 2020 – August 29, 2020

Figure 2: Utah Continued Weekly Unemployment ClaimsMarch 21, 2020 – August 29, 2020

Source: Utah Department of Workforce Services

Continued Claims 2019 Average

21 28

March April May June July August

4 11 18 25 2 9 16 23 30 6 13 20 27 4 11 18 25 1 8 15 22 290

20,000

40,000

60,000

80,000

100,000

120,000

140,000

$990,732,146

$896,628,754

$707,711,597$749,947,333

$ M

illio

ns

0

$200

$400

$600

$800

$1,000

$1,200

Mar-20 Apr-20 May-20 Jun-20

Total Residential Nonresidential Other

Source: Kem C. Gardner Policy Institute

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

New Claims 2019 Average

Utah New Weekly Unemployment Claims

21 28March April May June July August

4 11 18 25 2 9 16 23 30 6 13 20 27 4 11 18 25 1 8 15 22 29



4 11 18 25 2 9 16 23 30 6 13 20 27 4 11 18 25 1 8 150

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Utah Continued Weekly Unemployment Claims

20.0

40.0

60.0

80.0

100.0

120.0

Debt to GDP Ratio

0

1940

1941

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2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

(e)

2021

(e)

Actual Estimated

Source: Utah Department of Workforce Services


2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 20210%

2%

4%

6%

8%

10%

12%

14%

16%

7.9%

9.4%

4.5%

10.2%

US Utah

Figure 3: Unemployment Rate

Source: U.S. Bureau of Labor Statistics

suffering disproportionate job loss nationally.4 Latinos and other minority groups also account for a disproportionate percentage of workers in work places affected by COVID outbreaks, accounting for 73% of infected workers even though they account for only 24% of employees in the industry sectors where workplace outbreaks occurred.5

Barring another surge in cases and an economic shutdown, the worst appears to be over for the Utah economy, and a gradual, albeit fragile, recovery has begun. The Gardner Institute forecasts the Utah economy will grow again in 2021 at a 3.5% or better rate of job growth. Insight #2: The Utah economy has fared better than almost every state.

Utah’s job contraction of -1.8% from July 2019 to July 2020 was the second smallest contraction of any state. The U.S. job contraction of -7.7% is more than three times higher. (Figure 6)

Utah’s economic performance during the pandemic compares favorably with other states and provides opportunities to, as one local business leader has said, “recover to better.”6 Gov. Herbert’s Utah Leads Together IV plan identified three major opportunities for Utah’s revitalization efforts:7

1. Investment advantage – Utah can invest in infrastructure and people to create a competitive benefit for our state.

2. Economic leadership – Utah can assert greater economic leadership regionally, nationally, and globally to increase economic reach.

3. Long-term focus – Utah can avoid “short-termism” and address priorities that benefit the state for generations.

Insight #3: New or accelerated structural changes will dramatically impact the Utah economy.

Award-winning author Arundhati Roy said, “Historically, pandemics have forced humans to break with the past and imagine their world anew. This one is no different. It is a portal, a gateway between one world and the next.”8

In economic terms, this portal or gateway is defined by structural changes in the economy. Economists differentiate between cyclical changes, which are short and typically follow the business cycle, and structural changes, which are long-lived transformations that occur because of new technologies, changing demographics, shifting consumer behavior, and other forces.

The post-COVID-19 world will be impacted by, but not limited to, the following structural changes:

n New banking paradigm – Zero interest rates and a flat yield curve present new challenges for financial services. It remains to be seen how much and for how long these new banking realities will impact Utah’s financial sector.

Figure 4: Job ChangeYear-Over Percent Change July 2020

15.9%

13.7%14.0%

13.1%

10.3%

10.4%

10.8%

11.3%

11.3%

10.6%

11.6%

-16.2%

-12.3%

9.5%8.6%

8.9%

8.5%

8.7%

9.9%

9.4%

7.0%

8.0%

8.0%

6.3%

7.1%

6.6%6.4%7.7%

7.2%

7.8%

7.6%

7.4%

7.1%

7.9%

4.5%4.8%

5.7%

5.0%

13.3%

12.7%

7.1%

6.9%

6.6%

Unemployment Rate

0% to 6.0%6.1% to 7.0%

8.1% to 9.0%10.1% to 12.0%

13.1% to 15.0%15.1%+

Job Growth

-2.0% to 0%-2.1% to -5.0%

-5.1% to -8.0%-8.1% to -11.0%

-11.1% to -14.0%-14% or more

VTNHMACTRI

NJWVMDDCDE 10.4%

8.4%7.6%9.9%13.8%11.2%10.2%16.1%8.1%8.3% VT

NHMACTRI

NJWVMDDCDE

Total

Natural Resources

Construction

Manufacturing

Trade/Transportation/Utilities

Information

Financial Activities

Professional/Business Services

Education/Health Services

Leisure/Hospitality Services

Other Services

Government 1.1%

4.6%

-19.0%

-3.4%

-2.7%

3.3%

-1.5%

1.3%

-1.5%

7.0%

-11.5%

-1.8%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

0.3%

-1.8%-0.2%

-7.7%

US Utah

-8.7%

-8.8%

-8.2%

-9.6%

-8.5%

-11.0%

-9.4%-6.9%

-7.0%

-7.3%-7.9%

-6.4%

-7.0%

-7.8%

-8.1%

-5.4%

-4.4%

-5.1%-5.0%

-3.9%

-4.4%

-4.9%

-3.6%

-4.7%-4.1%

-4.3%

-4.3%-3.6%

-4.9%

-1.8%

-0.7% -13.7%

-8.7%

-9.5%

-6.9%

-5.3%

-6.0%

-6.5%

-4.9%

-9.2%-6.7%-7.3%-7.4%-10.7%-8.4%-8.5%-12.0%-9.5%-11.8%



n De-globalization and regionalization of supply chains – Business will increasingly seek more reliable and resilient supply chains. “Just-in-time” will be replaced by “just-in-case.” Reshoring and shorter supply chains will become more common. This megatrend may help a state like Utah, which benefits from a strategic location at the center of the interior western United States with attractive highway, rail, and air travel infrastructure.

n Tech-enabled services – Trends like remote work, telemedicine, remote sales, online education, and other technology-enabled services, which already had momentum before the pandemic, have accelerated.

Consider that in just a few weeks, e-commerce, online education, and work from home became the norm for many Utahns.

n Reckoning of commercial real estate – Commercial real estate feels not just the short-term impact of missed rent payments, but the long-term impact of behavioral change. Restaurant, hotel, and office property owners will need to actively manage this asset class as e-commerce and remote work, as well as new trends in safety and reduced business travel, impact commercial real estate not just in Utah, but worldwide.

15.9%

13.7%14.0%

13.1%

10.3%

10.4%

10.8%

11.3%

11.3%

10.6%

11.6%

-16.2%

-12.3%

9.5%8.6%

8.9%

8.5%

8.7%

9.9%

9.4%

7.0%

8.0%

8.0%

6.3%

7.1%

6.6%6.4%7.7%

7.2%

7.8%

7.6%

7.4%

7.1%

7.9%

4.5%4.8%

5.7%

5.0%

13.3%

12.7%

7.1%

6.9%

6.6%

Unemployment Rate

0% to 6.0%6.1% to 7.0%

8.1% to 9.0%10.1% to 12.0%

13.1% to 15.0%15.1%+

Job Growth

-2.0% to 0%-2.1% to -5.0%

-5.1% to -8.0%-8.1% to -11.0%

-11.1% to -14.0%-14% or more

VTNHMACTRI

NJWVMDDCDE 10.4%

8.4%7.6%9.9%13.8%11.2%10.2%16.1%8.1%8.3% VT

NHMACTRI

NJWVMDDCDE

Total

Natural Resources

Construction

Manufacturing


Information





Other Services

Government 1.1%

4.6%

-19.0%

-3.4%

-2.7%

3.3%

-1.5%

1.3%

-1.5%

7.0%

-11.5%

-1.8%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

0.3%

-1.8%-0.2%

-7.7%

US Utah

-8.7%

-8.8%

-8.2%

-9.6%

-8.5%

-11.0%

-9.4%-6.9%

-7.0%

-7.3%-7.9%

-6.4%

-7.0%

-7.8%

-8.1%

-5.4%

-4.4%

-5.1%-5.0%

-3.9%

-4.4%

-4.9%

-3.6%

-4.7%-4.1%

-4.3%

-4.3%-3.6%

-4.9%

-1.8%

-0.7% -13.7%

-8.7%

-9.5%

-6.9%

-5.3%

-6.0%

-6.5%

-4.9%

-9.2%-6.7%-7.3%-7.4%-10.7%-8.4%-8.5%-12.0%-9.5%-11.8%

Figure 6: Job ChangeYear-Over Percent Change July 2020


Figure 5: Utah Job Change by IndustryJuly 2019 – July 2020

15.9%

13.7%14.0%

13.1%

10.3%

10.4%

10.8%

11.3%

11.3%

10.6%

11.6%

-16.2%

-12.3%

9.5%8.6%

8.9%

8.5%

8.7%

9.9%

9.4%

7.0%

8.0%

8.0%

6.3%

7.1%

6.6%6.4%7.7%

7.2%

7.8%

7.6%

7.4%

7.1%

7.9%

4.5%4.8%

5.7%

5.0%

13.3%

12.7%

7.1%

6.9%

6.6%

Unemployment Rate

0% to 6.0%6.1% to 7.0%

8.1% to 9.0%10.1% to 12.0%

13.1% to 15.0%15.1%+

Job Growth

-2.0% to 0%-2.1% to -5.0%

-5.1% to -8.0%-8.1% to -11.0%

-11.1% to -14.0%-14% or more

VTNHMACTRI

NJWVMDDCDE 10.4%

8.4%7.6%9.9%13.8%11.2%10.2%16.1%8.1%8.3% VT

NHMACTRI

NJWVMDDCDE

Total

Natural Resources

Construction

Manufacturing


Information





Other Services

Government 1.1%

4.6%

-19.0%

-3.4%

-2.7%

3.3%

-1.5%

1.3%

-1.5%

7.0%

-11.5%

-1.8%

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

0.3%

-1.8%-0.2%

-7.7%

US Utah

-8.7%

-8.8%

-8.2%

-9.6%

-8.5%

-11.0%

-9.4%-6.9%

-7.0%

-7.3%-7.9%

-6.4%

-7.0%

-7.8%

-8.1%

-5.4%

-4.4%

-5.1%-5.0%

-3.9%

-4.4%

-4.9%

-3.6%

-4.7%-4.1%

-4.3%

-4.3%-3.6%

-4.9%

-1.8%

-0.7% -13.7%

-8.7%

-9.5%

-6.9%

-5.3%

-6.0%

-6.5%

-4.9%

-9.2%-6.7%-7.3%-7.4%-10.7%-8.4%-8.5%-12.0%-9.5%-11.8%


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

New Claims 2019 Average

Utah New Weekly Unemployment Claims


4 11 18 25 2 9 16 23 30 6 13 20 27 4 11 18 25 1 8 15 22 29



4 11 18 25 2 9 16 23 30 6 13 20 27 4 11 18 25 1 8 150

20,000

40,000

60,000

80,000

100,000

120,000

140,000

Utah Continued Weekly Unemployment Claims

20.0

40.0

60.0

80.0

100.0

120.0

Debt to GDP Ratio

0

1940

1941

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(e)

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Actual Estimated

Figure 7: U.S. Debt to GDP ratio

Source: Department of the Treasury, Office of Management and Budget, and Kem C. Gardner Policy Institute

U.S. -7.7%


Insight #4: Debt management will be the next shoe to drop. In the tenements of New York City in the early 20th century,

apartments were stacked on top of each other with very thin insulation. When an upstairs neighbor pulled off their shoe and dropped it, it was just a matter of time before the second shoe would drop. The idiom “waiting for the next shoe to drop” is the anticipation of the inevitable.

The nation’s fiscal rebalancing is an inevitable reality as the U.S. budget deficit and increasing debt load continue to climb. The U.S. debt-to-GDP ratio was close to 80% prior to the pandemic and is now more than 100%. Analysts expect it will ultimately climb close to record levels experienced after World War II.9 (Figure 7)

The economic theory behind the need for debt management is commonly referred to as “crowding out,” and it occurs in two ways. Public debt crowds out private borrowing by making capital less available and more expensive. That’s bad for

economic growth. Crowding out also occurs when burgeoning interest on the national debt crowds out needed public investment in infrastructure and people.

ForecastThe Gardner Institute expects the economy will not gain

traction until there is an effective COVID-19 vaccine. Until then, Utah voters and candidates should recognize the following:

1) The economic impact has been sudden, severe, and uneven, but the worst is over;

2) The Utah economy has fared better than almost every state, and this creates opportunity;

3) New or accelerated structural changes will dramatically impact the Utah economy; and,

4) Debt management will be the next shoe to drop.


Utah’s Housing Shortage: Rising Prices and COVID-19By James Wood, Ivory-Boyer Senior Fellow, Kem C. Gardner Policy Institute

Since the Great Recession, Utah’s has been the fastest growing state in the country. This growth has added several thousand new households to the state each year, driving demand for housing. Each additional household requires an additional housing unit, whether that household comes from net in-migration, a marriage, a divorce, or a child leaving home to live on his/her own. For a healthy housing market, the annual increase in housing units should be close to the increase in households. However, since 2010 the supply of new housing units in Utah has fallen far short of the number of new households. In 8 of the past 10 years, the increase in Utah households has exceeded the construction of new housing units (see Figure 1). This imbalance has created a severe housing shortage.

The shortage accumulated each year from 2010 to 2018, finally peaking at 56,473 (see Figure 2). Over the past two years, the number of new housing units has surpassed new households, giving some small measure of relief to the market. The cumulative shortage as of 2019 was 53,100. How should this gap between demand and supply be interpreted? Where are those thousands of households living?

In 2010, nearly 10% of rental units were vacant due to the Great Recession. These vacant units provided a ready supply of housing to accommodate the growth in households from 2010 to 2014. But as the vacant units were absorbed, the signs of a housing shortage began to emerge, and potential renters and buyers faced fewer housing choices.

About half of the 53,100 shortfall has been absorbed by vacant units, thereby driving down the vacancy rate. The result has been an extremely “tight” housing market with fewer housing opportunities for renters. The vacancy rates in Wasatch Front counties have been as low as 3% in recent years.

Housing Shortage and Housing PricesThe housing shortage has driven up home prices and rental

rates. From the first quarter of 2015 to the first quarter of 2020, UtahRealEstate.com reports that the median sales price of a single-family home in Utah increased from $231,000 to $360,000, a 56% increase. The monthly mortgage payment on that median-priced home increased from $1,280 in 2015 to $2,002. When compared with other states, Utah ranks among the top five in the rate of price increases. Only three other states, all in the West, have had higher rates of increase: Idaho, Washington, and Nevada (see Table 1).

And what about rental rates? The average base rental rate has increased by 37% to $1,175 in the past five years. In addition to

24,46024,4619,079

26,879

0

5,000

10,000

15,000

20,000

25,000

30,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

New Households New Housing Units

15,381

28,917

38,61841,276 42,676

49,10853,476

56,473 55,54753,100

0

10,000

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2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

6,422

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13,683 13,792

0

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16,000

2000

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2012

2014

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2018

2020

Single Family Multifamily Total

Figure 1: Annual Increase in Households and Housing Units in Utah


24,46024,4619,079

26,879

0

5,000

10,000

15,000

20,000

25,000

30,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


15,381

28,917

38,61841,276 42,676

49,10853,476

56,473 55,54753,100

0

10,000

20,000

30,000

40,000

50,000

60,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

6,422

6,768

13,683 13,792

0

2,000

4,000

6,000

8,000

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12,000

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2000

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2014

2016

2018

2020


Figure 2: Cumulative Annual Increase in Utah’s Housing Shortage


Table 1: Top Five States Ranked by Change in Housing Price Index (First Quarter 2015 to First Quarter 2020)

Metropolitan Area Change

Idaho 69.60%

Washington 59.05%

Nevada 55.72%

Utah 52.97%

Colorado 49.08%

Source: Federal Housing Finance Agency, Housing Price Index (HPI) Quarterly Report, 2020 Q1, March 2020


24,46024,4619,079

26,879

0

5,000

10,000

15,000

20,000

25,000

30,000

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019


15,381

28,917

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Figure 3: Permits Issued for Residential Units in Utah(January through June)

Note: Single-family units plus multifamily units doesn’t equal the total due to cabins and manufactured homes.Source: Kem C. Gardner Policy Institute.

the base rent, many renters must also pay for a media package and an assortment of other fees, bringing the rental rate (excluding utilities) to at least $1,300.

The housing shortage has pushed up housing prices and rents across the state, putting homeownership increasingly out of reach for many households. Homeownership rates for both young and minority households have declined in recent years due to high housing prices. Out of a million households in Utah, 250,000 pay more than 30% of their income for housing. After paying for necessities, these households have little left for health care, retirement, or a child’s education. In a 2019 survey conducted for the Salt Lake Chamber, housing affordability topped the list of issues that most concerned Utah families, ahead of transportation, air quality, and education.

Housing Shortage and Public HealthIn the early part of the decade, vacant units could not

accommodate all the households seeking housing. Many households, unable to find affordable housing due to the shortage, resorted to doubling-up with friends or family. To quote from a recent Pew Research Center study, “American adults are increasingly sharing a home with other adults with whom they are not romantically involved. This arrangement, known as ‘doubling-up’ or shared living, gained notice in the wake of the Great Recession, and nearly a decade later, the prevalence of shared living has continued to grow..” 10,11 During a pandemic, however, shared living raises the risk of transmission and infection, an unexpected public health consequence of Utah’s housing shortage.

The Census Bureau provides the following data on doubling-up in Utah.

● Since 2010, the doubling-up of relatives has increased from 6% to 7% of the household population, amounting to an increase of 20,000 individuals.

● Since 2010, the number of nonrelated individuals doubling-up has increased from 3.75% to 4.25% of the household population, amounting to an increase of 9,000 individuals.

● In 10 years, the share of individuals 25 to 34 years old, living with parents, has increased from 10.4% to 13.4%, amounting to an increase of 16,000 individuals.

COVID-19 and Housing Market ConditionsSurprisingly, COVID-19 has had no impact on new residential

construction. For the first six months of 2020, the number of residential permits issued was at an all-time high of 13,792 (see Figure 3). Multifamily activity has driven new construction to the second-highest January-to-June total ever, 6,728 multifamily units. Housing prices have also been unaffected by COVID-19. The statewide median sales price of a home increased by 7.6% (year over), about the same as the 7.9% increase in 2019. And despite the pandemic, the number of existing homes sold statewide was down less than 2% through the first six months of 2020.

The Utah housing market’s unexpected strength is due not only to the historically low interest rates but also to the state’s housing shortage. So far, COVID-19 has not dampened housing demand nor hurt new residential construction—a much different outcome than expected six months ago. It now looks like COVID-19 will not add to Utah’s housing shortage and that’s very good news.


Education Funding: Amending the Utah ConstitutionBy Andrea Brandley, Research Associate, Kem C. Gardner Policy Institute

This November, Utah voters will answer the following question: “Shall the Utah Constitution be amended to expand the uses of money the state receives from income taxes and intangible property taxes to include supporting children and supporting people with a disability?”

This marks the second statewide election in a row that an education funding issue appears on the Utah ballot. Two years ago, voters responded to a nonbinding question about increasing the tax on fuel in order to increase funding for public education. The majority voted no. This year, voters are being asked to expand the use of income tax revenue that is currently earmarked solely for education. This brief provides background information to help Utah voters make an informed decision about the amendment.

What’s on the 2020 ballot?During the 2020 general legislative session, the Utah

Legislature passed two bills: S.J.R. 9 (first substitute) and H.B. 357 (second substitute).

H.B. 357 stabilizes public education funding by:– Providing funding for inflation and student growth– Allowing school districts to use capital levy funds for

other purposes in low revenue years – Creating additional “rainy day” funds for education

However, this bill takes effect only if voters approve S.J.R. 9—the constitutional change expanding the use of income tax revenue to include services for children and people with disabilities — this November. Utah voters play a key role in this issue as the constitution cannot be changed without approval from the people. As a part of these changes, the legislature approved large spending increases for public education for FY 2021. The legislature reduced these increases due to the economic effects of COVID-19, but public education will still see a year-over-year increase in funding.

How does Utah education funding work?The responsibility of funding public education falls largely

to states and localities. As shown in Figure 1, the state funds the majority of public education (52%). Localities fund 41%, primarily through property taxes while the remaining 7% is funded federally.12 This amendment focuses on the state’s contribution through income tax revenue.

In the past, Utah has passed constitutional amendments to dedicate income taxes revenue to education spending. The first amendment dedicated all income tax revenue to K-12 public

education (1946) and the second allowed income tax to fund a portion of higher education as well (1996). Higher education was previously funded entirely through the general fund. Funding a portion of higher education through income tax revenue frees up general fund dollars for other purposes. This creates a link between the education and general funds as demonstrated in Figure 2, which provides budget flexibility for lawmakers.

While both income and sales tax revenue are growing, sales tax revenue has grown at a much slower rate in recent years.13 Because sales tax revenue provides for the general fund, lawmakers face increasing difficulty funding other areas of government including social services, transportation, and public safety. They alleviate this problem by funding more higher education expenses through income tax revenue. However, if the trend continues, soon higher education will be funded entirely through the education fund (see Figure 3). Expanding the use of income tax revenue through this constitutional amendment frees up additional general fund dollars, making it possible to continue to balance the budget through this link.

Figure 1: Funding Source for Utah Public Education, 2019

41% Local

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Figure 2: The Co-Mingling of Funds


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Figure 4 shows the change in per student state appropriations from 1997-2020 adjusted for inflation. Funding reached its peak in FY 2008. The subsequent drop is likely due to an infusion of federal dollars through the American Recovery and Reinvestment Act (ARRA) of 2009. This federal aid helped states mitigate the effects of the great recession on public education. Since FY 2012, per student state appropriations have been increasing, now approaching the same spending as the FY 2008 peak.

Utah’s student population increased from 478,000 in 1997, to 666,000 in 2020.14 Due to this growth, per-pupil funding has not increased at the same rate as total appropriations. The school-age population is expected to continue to increase through 2021, then decline and stabilize.15

Table 1: How does Utah compare to other states in funding?

Rank Description

Per-Pupil Expenditures

51 In 2017, Utah spent $7,200 per student compared to the national average of $12,200.

Proportion of Personal Income

39 In 2017, Utah contributed $33 per $1,000 of personal income to public education compared to the national average of $37.

Percent of Own-source Revenue

43 In 2018, Utah spent 24.3% of own-source revenue on public education compared to the national average of 27.4%. This provides one measure of the public effort that contributes to funding education, calculated as the percent spent on public education out of all state and local revenue – the funds within state and local government’s control.

Percent of the Economy

39 In 2016, education made up 2.87% of the state’s GDP and 3.19% of the nation’s GDP. This measure represents the relative amount of resources that state governments use to support public education.

Source: U.S. Census Bureau 2018 Annual Survey of School System Finances, U.S. Census Bureau 2017 Annual Survey of State and Local Government Finances, and 2019 National Center for Science and Engineering Statistics

Table 2: How does Utah compare to other states in outcomes?

Rank Description of Measure

ACT Score 30* The ACT is the most commonly used college entrance exam. Utah’s 2019 average composite score was 20.3, just below the national average of 20.7.

Graduation Rate† 20 Utah’s 2018 graduation rate was 87.0%, just above the national average of 85.3%.

Math and Reading Assessments

The National Center for Education Statistics (NCES) reports state by state test results in reading and mathematics for 4th and 8th graders. In 2019, Utah ranked‡ above average in all four categories.

Grade 4 Math 10

Grade 4 Reading 6

Grade 8 Math 18

Grade 8 reading 6

* This ranking is among all 50 states. When compared only to states with 100% participation, Utah ranks first among fifteen states, tied with Wisconsin.† Note that graduation requirements differ by state making comparisons difficult. Graduation rates also only include public schools. ‡ Note that the NCES suggest that little emphasis be placed on specific ranking as differences between many states lack statistical significance.Source: ACT and National Center for Education Statistics

Tables 1 and 2 describe how Utah compares to the rest of the nation in both funding levels and student outcomes. In addition to addressing Utah’s education achievement, achievement gaps should be acknowledged. Students of color and those coming from economically disadvantaged backgrounds continue to experience significantly worse outcomes than their White or more economically advantaged peers as demonstrated in Figures 5 and 6.16,17 If achievement gaps go unaddressed, statewide educational outcomes will likely worsen as Utah's population continues to diversify.

Figure 3: Percent of Higher Education Funding from Education Fund (Income Tax), FY 1997-2020

Figure 4: Per Student State Appropriations to Public Education, FY 1997-2020(2019 dollars)

Source: Office of the Legislative Fiscal Analyst, 2019

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I n f o r m e d D e c i s i o n s 2 0 2 01 0 I n f o r m e d D e c i s i o n s 2 0 2 0 1 1

Utah’s public education funding levels fall far below national averages. Educational outcomes fare better, but achievement gaps persist. The amendment allows additional programs to be funded through income tax revenue that is otherwise earmarked solely for education. However, it also provides

more budget flexibility for legislators and will likely lead to guaranteed funding for student growth and inflation and more secure funding for schools during economic downturns. Utah voters should consider the tradeoffs and make an informed decision this November.

Figure 5: Student Outcomes Based on Economic Status, 2018


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I n f o r m e d D e c i s i o n s 2 0 2 01 0 I n f o r m e d D e c i s i o n s 2 0 2 0 1 1

Endnotes1. Barry, J. (2020, March 17). The Single Most Important Lesson from the 1918 Influenza. New York Times.2. Burt, K. (2020, August 10), Utah Department of Workforce Services.3. Ibid.4. https://www.pewresearch.org/fact-tank/2020/06/09/hispanic-women-immigrants-young-adults-those-with-less-education-hit-hardest-by-covid-19-job-losses.5. https://www.cdc.gov/mmwr/volumes/69/wr/pdfs/mm6933e3-H.pdf6. Comment made by Economic Development Corporation of Utah president and CEO Theresa Foxley.7. Economic Response Task Force (June 17, 2020). Utah Leads Together IV.8. Roy, A. (April 3, 2020). The Pandemic is a Portal. Financial Times.9. Zandi, M. (April 26, 2020). This Week in the COVID-19 Crisis. Moody’s Analytics.10. “Doubled-up households are defined as having one or more adults in addition to the head of household and spouse or partner, such as an adult child living at

home, two related or unrelated families residing together, or a parent living with an adult child,” U.S. Census Bureau.11. Fry, R. (2018, January 31).”More adults now share their living space, driven in part by parents living with their adult children,” Pew Research Center. Retrieved

from http://pewrsr.ch/2E2mdcF.12. United States Census Bureau (2019a). 2017 Public Elementary-Secondary Education Finance Data. [Data file]. https://www.census.gov/data/tables/2017/econ/

school-finances/secondary education-finance.html13. Utah Office of the Legislative Fiscal Analyst (2019). YoY Change – Income vs Sales Tax. [Data file].14. Office of the Legislative Fiscal Analyst. (2019). Real Per Student Spending Public ed [Data file].15. Kem C. Gardner Policy Institute. (2019). Utah State and County Short-term Population Projections: 2018-2028. https://gardner.utah.edu/wp-content/uploads/

ShortTermPopEstJune2019.pdf16. United States Census Bureau (2019b). 2017 Annual Survey of State and Local Government Finances [Data file]. Retrieved from https://www.census.gov/

programs-surveys/gov-finances.html17. Note: “Economically disadvantaged” refers to a child experiencing intergenerational poverty, living in a family with an annual income at or below 185% of the

federal poverty level, or living with a legal custodian or legal guardian who can attest that the child or the child’s household is receiving services benefitting low-income households or individuals, as defined in Utah Code 53B-8a-201.

Issue ForumsModerated by Natalie Gochnour, DirectorKem C Gardner Policy Institute

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