Saturday, November 18, 2006

For Marianne--eduational budgets

Marianne MCA's been asking me some good questions in comments. This one was hard to answer quickly.

...I'm now confused about money. Hadn't thought about it before, but I've no idea how anything is funded in the US. Is there a federal budget for education (is federal even the word I want?), or does each state levy taxes for education, or is the money raised even more locally than that?
It depends. God, I hate that answer.

The Federal Government has various programs that it administers for all schools across the country. Some examples are: providing low cost lunches to needy school children, educating migrant worker children and providing extra reading support to low income children. Those come in under various Title names. (Title II, for example is for education of low-income children.) You apply for the funds based on your district's demographics, and you receive a specific amount of money which you can only spend on that program. Every five years, I think, there's a compliance review. We call those funds "Restricted Funds" because there's no flexibility in how they can be spent. I think about 5% of our budget comes from the Federal Government and all of it is, by definition, Restricted.

Hey, so the next time you hear the president talking about how much he's spending on education, remember how much of THAT goes into a dollars-spent-per-student calculation at the local level. Pennies. Depending on the child, at least in my district, usually nothing. Then there's **shudder** No Child Left Behind, NCLB, which we pronounce "Nickleby".

Each State then collects property taxes or other local taxes (tobacco taxes, and we get lottery money for textbooks). Each state is different in how they divvy it up from there. Some tax revenues are Restricted as well. For example, in California we have an anti-tobacco education tax levied on each pack of cigarettes sold. Educators LOVE acronyms; this is the TUPE (TOO-pee) fund, which stands for Tobacco-Use Prevention Education. If you do a "Healthy Kids Survey" of your student body, and apply for the funding, then you can get money which you can only spend on anti-drug education, anti-bullying education, and I think there's some money in there about violence too. But, again, it's Restricted.

Some states divvy money both through grants (like TUPE) and through general allocations which are made at the District or City level.

California is frustrating in that it is bound by the terms of an equal access lawsuit from 1972, Serrano v. Priest, and by Proposition 13 from 1978. I won't go into the details why, but both of those together place restrictions on the State and on the Counties. Basically, the State pools all the property taxes gathered throughout the state, and then redistributes all the tax revenue to the individual school districts according to a formula calculated in 1972. The formula can only be changed by an act of the legislature. (Which will never happen, not until all the districts throughout the state gang up on San Diego and LosAngeles. Don't hold your breath.) Prop 13 also dictates that no more than a certain percentage of all property taxes can be sent on to schools. We call this group of monies the "Revenue Limit."

Then local donations, like developer's fees or donations from local educational foundations, can overlay the State funds.

To give you an idea of how this works, here are some numbers from our most recent budget report:

Revenue Limit (from property taxes) makes up about 77% of our revenue
Further State Grants make up almost about 13%
Local donations make up about 7%
Federal monies make up 3%

About 28% of those monies are Restricted. 72% is Unrestricted, however, we cannot spend all of that because not all of the Restricted Mandates (laws which we have to follow) have funding attached to them. Hence, the term, "Unfunded Mandate." 72% = about 22 million, but we have to transfer about 4 million of that over to the Restricted side every year to pay for the programs which do not have adequate funding.
So. If you hit a budget crisis, you really only have control over about 70% of the budget, and you cannot increase revenue by raising taxes. In the 1970's my town had no new development and was less than half its current size. We now have 800K to 900K McMansions and our demographics have completely changed, but we are trying to run an excellent program on a 1972 model. The Federal involvement is so slim as to be laughable. Famously, three districts in Connecticut opted out of NCLB and refused to receive any Federal funding rather than spend any of their own money to support an unfunded mandate. This has now led to the entire State suing the Department of Education.

There's lots of other detailed issues involved in the entire topic of education funding, but the take away lesson is that unless you live in New England or New York, New Jersey, Maryland, or parts of Ohio and Pennsylvania, the educational system is essentially spinning its wheels, saying it will do more with less, but consistently refusing to give the local educators the tools or the money they need to educate students.

Did that answer your question, Marianne?


Marianne McA said...

Yes, it was fascinating, thank you. Seriously - thanks for taking the time. It's an odd thing that although we probably get more coverage of the US than any other foreign country, when it gets down to the nuts and bolts of how the country works, I know next to nothing.


Suisan said...

I guarantee you that most Americans believe that the Federal government pays for public education since it is law that all citizens must be educated until the age of 17, and that their property taxes somehow supplement that Federal funding in order to provide enrichment (arts, music, etc.)

The Americans who more fully understand that property taxes directly pay teacher salaries have little or no concept of the Restricted vs Unrestricted issue.

It took me months of attending consecutive Board meetings as an audience member before I started to understand even the basics.

My considered opinion is that the public education system is royally screwed up. This country is completely refusing to adequately finance education and has been dedicated to underfunding education for generations. Globally, we're shooting ourselves in the foot.

But until the populace rises up and demands that the Federal government increase funding to K-12 education to the tune of trillions of dollars, we'll just keep on doing what we've always done: Blame the unions for being so damn greedy as to demand a living wage and decent benefits. Because surely the employees of a struggling system are to blame.