Column

Governments are spending billions more on education, and it’s making inequality worse

California spending on education surged 10% from 2013-15

Photo of Jill Barshay

Proof Points

A majority of recessionary budget cuts to education have been restored.

The 2008 recession may seem like a long time ago, hitting before Barack Obama began his presidency, but public elementary, middle and high schools around the country are still feeling the pinch from it. The good news is that the most recent federal data showed a significant upsurge in state and local education spending in the 2014-15 school year — one that, if it persists, could eventually restore four earlier years of deep budget cuts.

Last week, the National Center for Education Statistics (NCES), an arm of the U.S. Department of Education, reported that local, state and federal governments had collectively spent 2.8% more on public schools during the 2014-15 school year than in the previous year. Less than 3 percent might sound measly, but it’s an unusually large boost when you’re talking about more than $575 billion spread across 50 million kindergarten to 12th-grade students. And it was the second consecutive year of spending increases, following the first post-recessionary spending uptick of 1.2% during the 2013-14 school year.

After adjusting for inflation by counting everything in constant 2015 dollars, this means that three quarters of the education cuts accrued between 2009 and 2013 were restored by 2015. Education spending hit a high of $11,621 on average per student in 2008-09 before budget cuts kicked in, and sank to a low of $11,019 in 2012-13. During 2014-15, each student was educated on $11,454, on average. (See adjacent graph.)

Federal spending, which accounts for less than 10 percent of public school funding, was virtually flat. Nearly all the new money came from local and state coffers, as property tax and state income tax receipts rose.

That means the spending increases are being felt unevenly around the country, atop uneven levels of education spending to begin with, ranging from a low of less than $7,000 per student in Utah to a high of more than $20,000 in New York. (See map.)

Education spending per student during the 2014-15 school year increased 2.8% to $11,454, on average across the nation. But some states spend a lot more than others, from a low of $6,751 in Utah to a high of $20,744 in New York.

The increases, however welcome, may also be increasing educational inequality in some states. That’s because many states primarily fund schools through local property taxes. As house prices have recovered more strongly in well-to-do neighborhoods than in poorer ones, that’s aided rich school districts more. However, state budgets have grown at the same time, and some states have specifically targeted funds to needier schools. How this all shakes out, and whether spending inequality is widening or narrowing during the economic recovery, will be known later this year when the NCES releases its annual report on school district finances.

In the current report of state-by-state spending, California led the nation with the highest spending increases, with a boost of more than 10 percent in education spending between 2013 and 2015. (California schools received 2.9% more in 2013-14, followed by a whopping 7.3% increase in 2014-15.) But it still spends only $10,449 per student — $1,000 less than the national average.

Both new and old taxes fueled California’s outsized rebound. Its Democratic Governor, Jerry Brown, convinced voters to raise taxes for education in 2012. And state income tax revenues sharply rebounded with the economic recovery. California also targets 40 percent of its state aid to struggling schools — ones that serve low-income students, foster-care students and English-language learners — rather than spending the funds evenly throughout the state.  “It’s taking a long time to restore the base,” said Paul Warren, a research associate at the Public Policy Institute of California. “School districts still aren’t where they were before the cuts hit.” That’s not predicted to happen until next year.

By contrast, neighboring Arizona continued to defund education in 2013-14 (by 2.4%), and increased school spending by only 1.5% in 2014-15. Its public school students were educated on $7,590 each, on average.

“Some states are really throwing education under the bus,” said Bruce Baker, a school finance expert at Rutgers University. Baker argues that several states, such as Arizona, Tennessee and Michigan, are spending too small a share of their state’s economic output on education. Other low-spending states, such as Mississippi and New Mexico, don’t have the capacity to spend more because their regional economies are too weak, he said.

Even some conservative states made large investments in education in 2014-15.  Still flush with oil money at the time, the Alaska legislature increased is its education spending by 8.6 percent. But it was largely a one-shot contribution to teacher pensions that isn’t expected to be repeated.

Much of the state of Pennsylvania’s $440 million increase in education spending was also allocated to teacher pensions, catching up on missed contributions during the recession.  Marc Stier, director of the Pennsylvania Budget and Policy Center, said that only $100 million of the increase in state funds ended up in classrooms. And the 20,000 teachers, librarians and other school staff laid off during the recession still haven’t been rehired, he said.

Stier added that Pennsylvania continues to operate the most unequal public school system in the country, with the biggest funding gaps between rich and poor. A new state funding formula, favoring poor districts, went into effect in 2016. But it only applies to fresh, new spending, not the continued funding of existing programs. Stier says that the poorest 25 percent of school districts in the state are still educating students with $104 less per student than before the recessionary budget cuts hit. The richest 25 percent of districts have $21 more per child. Wealthy districts were able to spend more, thanks to surging property tax receipts. 

What the recession taketh away, the recovery doesn’t always giveth back.

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Jill Barshay

Jill Barshay is a contributing editor who writes the weekly “Proof Points” column about education research and data. She taught algebra to ninth graders for… See Archive

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