The ReThink Series: Idaho Education Funding

Five questions

about education

funding in Idaho.The ReThink SeriesKnowledge Base of Education Facts

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

Inside:

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.

ReThink Funding / JKAF.ORG // PG 2

5FIVE QUESTIONS ABOUT EDUCATION FUNDING IN IDAHO

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

Where does the money for education come from?

How does spending di�er across Idaho and why?

How do Idaho schools spend their money?

Would spending more improve achievement?

Q1:

Q2:

Q3:

Q4:

Q5:


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.....................................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?

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.

A:

*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 di�erent expenditure categories and institutions.

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

NOTE

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

2NDTO LAST

LAST


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

Source: NCES State Fiscal Report, 2011

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Idaho = $6,821 / student

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United States K12 Expenditures per Student///2011


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.

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


A:

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

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Total Personal Income perSchool-age Child, Ages 5-17///2011


NOTE

Most Mountain Weststates have relatively

small economies.


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.

Source: The Urban Institute—Brookings Institution Tax Policy Center

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

0%

1%

2%

3%

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5%

1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

U.S.

Idaho


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.


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

K12 Current Expenditures as a Share of Total Personal Income

/// 2011

1%—

0%—

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Source: The Urban Institute—Brookings Institution Tax Policy Center

EDUCATION IS THE THE GOLDEN DOOR

—George Washington Carver

KEY TO UNLOCKOF FREEDOM.

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

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 a�ecting 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.

A:

Q2: Where does the money for education come from?

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

$0

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1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

The Property Tax ReliefAct of 2006 reduced local property tax revenues and increased state-level support.

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

Idaho K12 Revenues by Type ($ millions)/// 1997-2011


Property Tax Relief Act of 2006

Recession-related e�ects

Source: NCES State Fiscal Reports

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 e�ects 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.

A:

Q2: Where does the money for education come from?

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

Recession Annual change

Year-to-year Change in Idaho’s K12 Current Expenditures/// 1978-2011


-5%

0%

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1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

State fundingformula

revisions•••

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Expirationof federalstimulus funding

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

.....................................Q3:

How does

spending di�er across

Idaho and why?

A:On average, large school

districts have lower per-student

spending than small districts.

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.

A:

Q3: How does spending di�er across Idaho and why?

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

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

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

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

..............................................................$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.

Average K12 Spending per Student, by Idaho School District and Charter School Enrollment Quartiles/// 2011-2012*


SM DISTRICTS /// 141 AVG. STUDENTS

MED DISTRICTS /// 337 AVG. STUDENTS

LRG DISTRICTS /// 851 AVG. STUDENTS

XL DISTRICTS /// 5,862 AVG. STUDENTS

Source: Idaho SDE

State and federal revenue provides the foundation for Idahoschool budgets. The state distributes resources based primarily onaverage daily attendance and associated sta�ng 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.*

A:


Idaho school districts can boost spending with local tax increases.

*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.

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

Revenue per Enrollee, by Level of Government, Selected Large Districts, Idaho/// 2012


$16K —

$14K —

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$10K —

$8K —

$6K —

$4K —

$2K —

$0 —Boise

IndependentMeridian

JointNampa Pocatello Coeur

d’AleneIdahoFalls

BonnevilleJoint

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Local / Other

Federal

State

Education Week’s Wealth Neutrality Index measures the relationship between levels of property wealth in local school districts and per-student 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.

A:


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

Source: Education Week Research Center, 2014

Education Week’s Wealth Neutrality Scores: Relationship between District per-Student Funding and Local Property Wealth/// 2011


Higher scores indicate a stronger

relationship between district- level wealth and

per-student spending.

•••

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.....................................Q4:How do Idaho

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.

A:

Q4: How do schools spend their money?

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

*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.

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

Share of per-Student Spending by Spending Type, Idaho vs. U.S./// 2010


100%—

0% —

2% ......Other Support Services...... 3%

2% .....General Admin. Support..... 2%

4% ...Instructional Sta� 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%

.....................................Q5:Would spending

more improve

achievement?

A:Higher per-student

spending does not

guarantee higher

student achievement.

A:

Q5: Would spending more improve achievement?

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

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


Reading

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Current Expenditures per Student

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Teton County

Lake Pend Oreille

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 medianteacher 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.**

A:

Q5: Would spending more improve achievement?

*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.

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


Math

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Payette

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ShelleyMoscow

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Kellogg

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Teton County

Lake Pend Oreille

Preston

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.

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?

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.


econw.com

jkaf.org

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

FYI

Documents

The ReThink Series: Idaho Education Funding