Federal, State & Local Education Finances Nomura Global Media - PowerPoint PPT Presentation

Federal, State & Local Education Finances Nomura Global Media New York Field Trip 2012 New York City, New York Thomas Gais & Lucy Dadayan May 22, 2012

State revenue crisis is easing, but state-local fiscal crisis continues Rockefeller Institute of Government 2

Worst state government tax declines in 5+ decades - worse than 2001 recession Percentage Change in Real State Government Taxes & Real GDP vs. Year Ago 18% Real GDP 15% Real state tax revenue 12% 9% 6% 3% 0% -3% -6% -9% -12% -15% -18% Sources: U. S. Census Bureau (Quarterly tax collections); Bureau of Economic Analysis (real GDP). Notes: (1) % changes averaged over 2 quarters; (2) No legislative adjustments; (3) Recession periods are shaded. Rockefeller Institute of Government 3

State Taxes are Improving While Local Taxes Continue to Decline Year-Over-Year Change in Real State Taxes and Local Taxes 9% State Local 7% 5% 3% 1% -1% -3% -5% -7% -9% -11% -13% Sources: U.S. Census Bureau (tax revenue) and Bureau of Economic Analysis (GDP price index). Notes: (1) 4-quarter average of percent change in real tax revenue; (2) No adjustments for legislative changes. Rockefeller Institute of Government 4

State income and sales taxes are recovering Local property taxes are weakening Real Tax revenue changes since start of recession 10 5 0 (5) (10) (15) (20) Sales tax (state) Income tax (state) (25) Corporate income tax (state) Property tax (local) (30) Notes: Income, sales, & corporate taxes for state governments, property taxes for local governments. Rolling annual totals. Source: Rockefeller Institute analysis of data from Census Bureau and Bureau of Economic Analysis. Rockefeller Institute of Government 5

Property Taxes Trending Downward and Are Likely to Fall Further Real Percent Change in State-Local Property Taxes Since the Start of Recession 21 1973-Nov 1980-Jan 1990-July 2001-March 2007-Dec 18 15 12 9 6 3 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 (3) (6) Notes: Four quarter moving averages. Source: Rockefeller Institute analysis of U. S. Census Bureau quarterly tax survey. Rockefeller Institute of Government 6

K-12 Education Enrollment and Financing Rockefeller Institute of Government 7

K-12 Enrollment as Share of Total Population: Great Variation Across States Rockefeller Institute of Government 8

K-12 Enrollment: Percent Change, 2005-2010 Rockefeller Institute of Government 9

NCES Projects Large Pupil Enrollment Growth in West; Declines in Northeast Rockefeller Institute of Government 10

Real Per Pupil Expenditures 14,000 Total exp. Instructional exp. 12,000 10,000 8,000 6,000 4,000 2,000 0 Sources: Rockefeller Institute Analysis of NCES and BEA data. Rockefeller Institute of Government 11

Great Variation in Average Per-Pupil Total Spending, 2009 TN OK MS ID UT AZ Median State Spending NC KY by Region AR AL IN SD NV Northeast $15,591 ND FL CO Midwest $12,017 CA MO South $10,168 MT WV MI West $11,033 IA TX KS GA SC OR WA NM LA OH WI VA NE IL MN NH ME HI PA RI DE MD MA VT CT AK NJ NY WY 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Notes: Spending adjusted to inflation. Sources: Rockefeller Institute analysis of NCES and BEA data. Rockefeller Institute of Government 12

Sources of K-12 Education Revenues, 2009 US Total = $591.4 billion Local State 43.6% 46.9% Federal 9.6% Source: NCES. Rockefeller Institute of Government 13

State Revenue as Share of Total K-12 Revenues in 2009: Wide Variations IL Median State Share of NV SD MO Total Revenues, by FL NE Region RI NH ND PA CT Northeast 40% IN MA NJ Midwest 42% VA TX GA South 50% MD ME West 56% CO WI NY TN IA LA US AZ OH SC MT OR UT OK MS AR MI WY KY CA AL KS WV WA DE NC AK MN ID NM HI VT 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Source: Rockefeller Institute analysis of NCES data. Rockefeller Institute of Government 14

Per-Pupil Federal, State, and Local Real Revenues, 1989-2009 7,000 Federal Revenue State Revenue Local Revenue 6,000 5,000 4,000 3,000 2,000 1,000 0 Sources: Rockefeller Institute Analysis of NCES and BEA data. Rockefeller Institute of Government 15

Real Per Pupil Local Revenues: Growing Divergence b/n Northeast & West States 18,000 Northeast Midwest South West 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Notes: States classified based on average real per pupil total expenditures from 1989 to 2009. Sources: Rockefeller Institute Analysis of BEA and NCES data. Rockefeller Institute of Government 16

Real Per Pupil State Revenues, by Region 16,000 Northeast Midwest South West 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Notes: States classified based on average real per pupil total expenditures from 1989 to 2009. Sources: Rockefeller Institute Analysis of BEA and NCES data. Rockefeller Institute of Government 17

Real Per Pupil Federal Revenues, by Region 3,300 Northeast Midwest South West 3,000 2,700 2,400 2,100 1,800 1,500 1,200 900 600 300 0 Notes: States classified based on average real per pupil total expenditures from 1989 to 2009. Sources: Rockefeller Institute Analysis of BEA and NCES data. Rockefeller Institute of Government 18

Real Per Pupil Total Revenues, by Region 35,000 Northeast Midwest South West 30,000 25,000 20,000 15,000 10,000 5,000 0 Notes: States classified based on average real per pupil total expenditures from 1989 to 2009. Sources: Rockefeller Institute Analysis of BEA and NCES data. Rockefeller Institute of Government 19

Higher Education Enrollment and Financing Instability and Long-Run Shifts in Sources of Funding Rockefeller Institute of Government 20

Higher Education FTE Enrollment as Share of Total Population: 2011 Rockefeller Institute of Government 21

Higher Education FTE Enrollment: Percent Change, 2006-2011 Rockefeller Institute of Government 22

Sources of Higher Education Revenues, 2011 US = $143.8 billion ARRA Funds, 1.9% Net Tuition, 39.2% All State Support, 52.5% Local Taxes, 6.4% Source: State Higher Education Executive Officers. Rockefeller Institute of Government 23

Total Educational Revenue Per FTE, FY 2011 WA FL MT CO UT CA Median Higher Education KS ID OH Revenue per FTE GA AZ OR LA IN Northeast $13,120 NM HI SD Midwest $10,545 NH WI NE South $11,664 SC WV West $ 9,869 NV MO MA IA US TN AR VA MS IL OK NY MN NC ND TX KY AL PA VT MI NJ MD ME RI CT DE AK WY 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Source: Rockefeller Institute analysis of State Higher Education Executive Officers data. Rockefeller Institute of Government 24

Higher education as “balance wheel” in state budgets: Volatility in state/local appropriations and growth of net tuition $9,000 $8,000 $7,000 $6,000 $5,000 State/local appropriations per FTE $4,000 Net tuition revenue per FTE $3,000 $2,000 $1,000 $- 1986 1991 1996 2001 2006 2011 Rockefeller Institute of Government 25

Public universities in South and West still rely heavily on S/L govts—despite trends toward convergence 9,000 9,000 West South 8,000 8,000 7,000 7,000 6,000 6,000 5,000 5,000 Net tuition Net tuition 4,000 4,000 State/local State/local governments governments 3,000 3,000 2,000 2,000 1,000 1,000 - - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Rockefeller Institute of Government 26

Public higher education in Northeast & Midwest now splits costs between tuition & SLG appropriations 9,000 9,000 Midwest Northeast 8,000 8,000 7,000 7,000 6,000 6,000 5,000 5,000 Net tuition Net tuition 4,000 4,000 State/local State/local governments governments 3,000 3,000 2,000 2,000 1,000 1,000 - - 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Rockefeller Institute of Government 27

Significant cuts in local government education employment Continued growth in state government education employment (largely higher education institutions) Rockefeller Institute of Government 28

State & Local Government vs. Private Sector Employment During The Great Recession 2% Private State gov. Local gov. 1% Cumulative percent change since start of recession 0% -1% -2% -3% -4% -5% -6% -7% -8% Source: U.S. Bureau of Labor Statistics (CES, seasonally adjusted). Rockefeller Institute of Government 29

Local Government Employment Has Declined Sharply Since the Great Recession 2.0% Local education Local non-education 1.5% Cumulative percent change since start of recession 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% -2.5% -3.0% Source: U.S. Bureau of Labor Statistics (CES, seasonally adjusted). Rockefeller Institute of Government 30