Transcript Iowa Economic and Education Comparability

In Preparation for the
2015 Legislative
Session
Iowa Economic and Education
Comparability: Education Coalition
Data and Advocacy for Adequate and
Timely School Funding
Policy Question:
Can Iowa afford to adequately and timely fund
public education?
Agenda for this recording:
– State’s general fund health
– Iowa Economic Health
– Trends in Iowa education funding
State of Iowa General Fund
3
• CRF = $522.3M
• EEF = $174.1M
Source: Iowa Legislative
Services Agency Graybook,
end of session analysis
https://www.legis.iowa.gov/do
cs/publications/EOS/26076.pdf
FY2015 Surplus:
• $660.0 million
Source: Iowa Legislative Services Agency Graybook, end of session analysis
https://www.legis.iowa.gov/docs/publications/EOS/26076.pdf
State’s Cash Position
aka “don’t panic”
• Cash position: north of $1B
– CRF full at $522.3 million
– EEF full at $174.1 million
– Surplus for FY 2015 $660.0 million
• LSA details $350 million May 2014 revenue dip
–
–
–
–
$100 million due to deposit of cig taxes in Health Care Trust Fund
$80 million deposit into Taxpayer Trust Fund
$32 million due to expansion of Earned Income Tax Credit
Behavior changes as taxpayers made financial decisions at the end
of 2012 calendar year, impacting 2013 revenues
Future Revenue Estimate
7
REC Oct. 9
• Revised FY 2015 to 5.6% ($361.5 million)
• Set FY 2016 growth of 4.8% ($328.2 million)
– +5.3% Personal Income Tax
– +4.5% Sales Tax
– +8.2% Corporate Income Tax
– 0% Refunds
• Through Oct 30, 2014, 4.2% net revenue
growth compared YTD to FY 2013.
• Overall, healthy if not spectacular revenue
growth
8
Economic Comparability
9
Per Capita Personal Income
2013
Iowa
2012 2011
2010
2003
$45,114 $43,935 $40,470 $42,040 $29,828
National $44,543 $43,735 $41,663 $39,937 $31,472
Iowa
22
24
25
28
33
Rank
Highest ranking among the states
for Iowa in years and two
consecutive years higher than
national average.
www.bea.gov
Iowa’s growth of 3.2%
(2012-13) ranked 9th in the
nation and is in the highest
quintile.
Median Household Income
$51,322
$52,000
$51,027
$50,000
$48,000
$46,000
$44,473
$44,000$43,042
$42,000
$40,000
$38,000
2004
2005
2006
2007
Iowa
2008
2009
2010
2011
USA
In 2011, Iowa ranked 24th in the nation in Median Household Income, with
two consecutive years above the national average.
LSA FACTBOOK quoting U.S. Bureau of the Census
13
Iowa State and Local Total Tax Burden Per Capita
as a Percentage of Per Capita Personal Income
0
5
10
8
Iowa Rank Among 50 States
(1 is highest and 50 is lowest)
15
20
25
30
35
40
45
50
29
33
Source: www.taxfoundation.org Tax Foundation calculations based on
data from the Bureau of Economic Analysis, the Census Bureau, the
Council on State Taxation, the Travel Industry Association, Department
of Energy, and others.
14
Iowa’s economic index shows growth
in July (DMR 9.7.14)
• An Iowa DOR look at the future of the state’s
economy improved in July, increasing for the 10th
straight month. The state’s economic index rose to
109.3 in July, up from a revised 109.2 in June.
• Index looks at 8 factors, such as residential building
permits, to forecast the direction of Iowa’s economy.
• A year ago, the index was at 106.3
• A separate DOR index measures employment. That
index rose by .08 in July, marking the 46th consecutive
month of gains.
Condition of the Economy
(March 10 Education Coalition Funding Fact of the Week)
• Des Moines, Iowa, tops Forbes list of best places for business and
careers. “It is the only place that ranks among the top quartile in
at least nine of the 12 metrics we graded the cities on. Highlights
for the Des Moines metro area include business costs that are 17%
below the national average and an educated workforce where 36%
of the population has a college degree and 92% possess a high
school diploma.”
• Forbes also cites tech sector growth (Facebook and Microsoft
expansions) and low energy costs in Iowa, stating, “a big carrot in
Iowa for data centers and other businesses with heavy energy
usage: Energy costs are 22% below the national average, according
to Moody’s Analytics;
• Iowa has a AAA bond rating by all three bond rating agencies,
Moody’s and Fitch, and also Standard and Poor’s, for many years
running. The highest rating is AAA, or triple-A, which indicates an
“extremely strong capacity to meet financial commitments.”
Condition of the Economy
(March 10 Education Coalition Funding Fact of the Week)
• Iowa: The June RMI (Rural Mainstreet Index) for Iowa expanded to 56.8
from May’s 55.8. The state’s farmland-price index for June advanced to
57.8 from May’s 44.1. Iowa’s new-hiring index for June soared to 73.9
from May’s 61.1. Ernie Goss, a Creighton University economist, compiles
the report http://www.gossinstitute.com/?q=node/129 ;
• The June farm-equipment sales index inched forward to 35.0 from 33.6 in
May. The index has been below growth neutral for 12 straight months.
“Despite improving economic activity on the regional farm, agriculture
equipment and implement dealers in the region are experiencing very
weak sales to farmers in the region. On the other hand, farm equipment
manufacturers continue to experience positive growth due to healthy
sales abroad,” said Goss.
Talking about low crop prices?
Doesn’t that mean the
economy will tank?
• REC had info on the ag economy when they set
the estimate of 5.6% for FY15 and 4.8% for FY16.
• Low price per bushel of corn lowers income for
corn producers (depending on yields), however . .
• Cost of feed for livestock goes down, increasing
profit potential
• Cost of corn for ethanol production goes down
• Equipment manufacturing is experiencing layoffs
but long term investments (grain driers and bins)
are steady to increasing
Sum it Up
• Is this Heaven? No, it’s Iowa.
• We’ve recovered from the economic
downturn better than most states.
• Revenue dip appears to be one-time.
• Education funding will keep the economy
moving along and build a solid workforce.
• So remember that policy question? Do you
think Iowa can afford to commit to funding
education adequately (and timely)?
Education Funding Comparability
20
Public Education Coalition Funding
Fact of the Week
• Joint effort of AEAs, IASB, ISEA, SAI and UEN
• April 24 Issue has link to the entire set
• http://us5.campaignarchive1.com/?u=e0acb6236d9a5dbd136a38e
f4&id=948ddcee87&e=2570288da8
• Let’s take a look at some of the data:
$1,647
below the
national
average
Source data: Iowa Legislative Services Agency 2013 FACTBOOK
https://www.legis.iowa.gov/docs/publications/FCT/2014/25037/25037.pdf
Poverty
• Iowa’s funding for
at-risk students
and dropout
prevention
resources, combined with targeted grant funds for highneeds schools soon to be appropriated in July 2015,
translates into a 9.8% additional funding commitment
for low-income students.
• The national average investment is an additional 29%
funding per pupil beyond the base for low-income
students. Most states provide an additional 20-25%.
Source data: Free and Reduced Lunch Percentage Count data from Iowa
Department of Education BEDS data collection.
National statistics from American Institutes for Research, Study of New Funding
Method for Nevada Public Schools, Sept. 25, 2012.
English-Language Learner Funding
Source: Iowa Department of Education, Bureau of Information and
Analysis, Basic Educational Data Survey and EASIER
During the 2013
interim, an ELL task
force met and studied
needs of students, best
practice and funding
considerations. In their
report, they
recommended
“weighted funding
closer to the national
average by increasing
from .22 to .39 through
a phase-in formula over
a three-year period.”
As Special Education Costs Increase,
So do Deficits
LSA Issue
Review: “An
allowable
growth rate of
0.0% in FY12
impacted FY12
balances
negatively.”
Special Education Deficits: FY 2007 through FY 2013
(dollars in millions)
FY 2007
FY 2008
FY 2009
FY 2010
FY 2011
FY 2012
FY2013
$0.0
($10.0)
($20.0)
($30.0)
($40.0)
The FY13 special
education
deficits in this
chart shows the
trend continues.
($50.0)
($60.0)
($70.0)
($80.0)
Amount of Revenue Shortfall to Cover Expenditures
Legislative Services Agency, Fiscal Division, Issue Review, Dec. 12, 2013, State School
Aid Funding for Special Education
Education in Iowa gets a Smaller Slice
• The National Association of State Budget Officers
(NASBO) State Expenditure Report analyze all
state expenditures excluding bonds (not just general
fund.) In their analysis on Table 5, page 11, titled State
Spending by Function, as a Percent of Total State
Expenditures, Fiscal 2012
• Iowa Elementary and Secondary Education for FY 2012
was 16.8% of total state spending. That compares with
an average of 18.9% in the plain states region in which
Iowa is categorized and well below the national
average of 20.0% for all states.
Education in Iowa gets a Smaller Slice
The National Association of State Budget Officers (NASBO) State Expenditure Report
Increase in Iowa Per Pupil Funding Since 2008:
Is it really more than 10%?
• Digging deeper into a study that showed Iowa posted more
than a 10% increase in formula funding: A study titled “NO
RECOVERY HERE” is from the Center on Budget and Policy
Priorities, Sept. 2013.
• It reports most states’ funding for schools is less than
before the 2008 recession.
– The report stated that at least 34 states are providing less
funding per student for the 2013-14 school year than they did
before the recession hit, with 13 of these states having cut perstudent funding by more than 10 percent.
– At the opposite end of the spectrum, per-pupil spending grew in
14 states, but only two states posted an increase of more than
10 percent. Those two states? North Dakota and Iowa.
How did they conclude 10%?
• Iowa’s biggest increase in formula funding since 2008 occurred
when the legislature rolled over $300 million for teacher salary
supplement, professional development and early intervention class
size funds into the formula beginning in FY 2010. These funds were
previously a categorical fund, which this methodology states they
did not consider.
• From the LSA’s per pupil funding analysis, footnote #6 explains: “FY
2010 is the first year of K-12 funding of the State Categorical
Supplements through the school aid formula and accounts for $648
per pupil.” Adjustment for this item alone would show Iowa’s per
pupil funding formula adjusted for inflation at a reduction of $96
per student since 2008, not the $552 increase cited in the report.
• In simple terms, the 10% increase in state foundation aid in Iowa is
visible only on accounting forms, not more funding available for
schools and classrooms.
Center on Budget and Policy Priorities, May 20,
2014 New study looking at all spending.
http://www.cbpp.org/cms/?fa=view&id=4011
•
•
•
•
Iowa experienced -11.7% change in spending
per student, inflation –adjusted, since 2008
Only 10 states lowered spending more than
Iowa
Study concludes Iowa has lost $641 per
student, inflation-adjusted, since 2008
Increases in per student spending this year
don’t fully compensate for the prior cuts:
Iowa’s change in spending per student,
inflation-adjusted, FY 13 to FY 14 is $23
Iowa’s % change in spending
per student, inflation-adjusted,
FY08 to FY14, is down $641 per
student
Source: NCES
data adjusting
for cost of living
differences
Source: NCES
data adjusting
for cost of living
differences
It’s not the Money, it’s what you do
with it. . . .
• We often hear push back on the request for
adequate funding with the statement, “we
shouldn’t just throw more money at the
problem.”
• What does education spending buy? Or put it
this way,
• If your district had $1,657 more per pupil,
what would you be doing with it to make a
difference for students?
Share this information
• Hopefully, this presentation has prepared you
communicate with state policy makers,
stakeholders, parents and other school leaders
about the condition of education funding in
Iowa.
• Engage others, share and let us know how we
can help.
• Thanks for listening in!
ISFIS Staff
Contacts
Contact Us Office 515-251-5970
Larry Sigel
Margaret Buckton
[email protected] [email protected]
Cell: 515-490-9951 Cell: 515-201-3755
Josie Gerrietts
Traci Giles
[email protected] [email protected]
www.isfis.net
Jon Muller
[email protected]
Cell: 515.577-2136
Susie Olesen
[email protected]
Cell: 641-745-5284
Sean Gibson
[email protected]
James Passick
[email protected]