Transcript 2008 Mark Joyce NH Econom…cation..

The Economy
And its possible impact on education
and public service?????
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Presentation on September 25 and 26, 2008
Dr. Mark V. Joyce, New Hampshire School
Administrators’ Association
Special Acknowledgement to Russ Thibeault
from Applied Economic Systems
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The National Economy
 What are the trends?
 How may they impact public services?
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4
5
6
7
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NY Times 9/24/08
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NY Times 9/24/08
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USA Today 9/25/08
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USA Today 9/25/08
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What can we learn from these
current trends?
Are these indicative of NH?
What might the impact be on NH?
NHSAA
13
The NH Economy and its Impact
on NH School Districts
What are the current conditions?
What might be ahead?
What can school leaders do to stay ahead of
the impact?
NHSAA
14
What are the Current Conditions?
What’s the history of expenditures?
What is the historic rate of
increase?
Where have costs risen?
Where does the money come from?
NHSAA
15
Expenditures Rise Twice Rate of
Inflation
Applied Economic Research
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Major Categories All Increase
Expenditure Change, 2000-2006
$300,000,000
$250,000,000
$200,000,000
$150,000,000
$100,000,000
Applied Economic Research
Subtotal:
Support/Administration
Other Instructional
Programs
Vocational Programs
Special Programs
$-
Regular Instruction
$50,000,000
17
All Major Categories Rise Rapidly
200 0-200 1
Ins truction
Regul ar In structio n*
Special Progra ms*
Vocati onal Progra ms*
Other Instructiona l Prog rams
Support/Overhe ad
Student Support Services
Instructional Staff Support
General Administration and Business
School Administration
Business Services
Plant Operations
Pupil Transportation
Non-Public Programs
Community Programs
Bond & Note Interest
Charter Schools/Other Agencies
Food Service
Total
$ 690,870,348
251 ,043 ,065
28,162,661
22,924,832
97,607,470
47,178,383
54,987,607
85,643,253
7,023,726
133,447,376
66,473,642
368,370
4,413,859
33,014,855
109,822
15,400,105
1,538,669,374
Change
Number
200 6-07
959 ,463 ,148
415 ,946 ,689
39,437,805
35,842,446
$
$
$
$
268,592,800
164,903,624
11,275,144
12,917,614
154,621,231
75,401,603
86,767,132
123,341,956
12,078,932
198,964,593
97,372,775
254,051
6,517,478
52,042,734
610,661
22,281,193
2,280,944,427
$
$
$
$
$
$
$
$
$
$
$
$
57,013,761
28,223,220
31,779,525
37,698,703
5,055,206
65,517,217
30,899,133
(114,319)
2,103,619
19,027,879
500,839
6,881,088
742,275,053
$
Applied Economic Systems
Percent
39%
66%
40%
56%
58%
60%
58%
44%
72%
49%
46%
-31%
48%
58%
456%
45%
48%
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Special Programs=Fastest Rate of Increase
Expenditure Change 2000-2006
80%
70%
60%
50%
40%
30%
20%
10%
0%
66%
56%
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40%
39%
rI
la
eg
u
R
52%
Applied Economic Research
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Education Expenditures Rise,
Despite Declining Enrollment
2000-2001
Total Expenditures
Total Expenditures (Inc Debt Service)
$ 1,599,120,045
ADM
Expenditures per Pupil
$
Consumer Price Index Change 2000-2007
NH Personal Income Change 2000-2007
Change
Number Percent
2006-07
$ 2,377,463,404
198,290
8,065 $
$
191,655
12,405 $
778,343,359
-6,635
4,340
49%
-3%
54%
21%
27%
Applied Economic Systems
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What are the Revenue Sources?
Where do they come from?
Are they predictable and
sustainable?
NHSAA
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Overview of NH Taxes
Interest and Dividends
Inheritance and Estate
Business Profits
Business Enterprise
Communications Services
Electricity Consumption
Meals and Rental
Tobacco
Real Estate Transfer
Timber
Gravel
State Education Property
Utility
Local Property Tax
NH Department of Revenue
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Who really pays for Public
Education?
Lets look at the increase from 2000-06
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Property Taxes Fund The Increase
Revenue Change By Source 2000-2006
$700,000,000
$600,000,000
$500,000,000
$400,000,000
$300,000,000
$200,000,000
$100,000,000
$Local
Taxation
Tuition,
Adequacy Other State
Food, &
Aid
Sources
Other Local
Revenue*
Applied Economic Research
Federal
Sources
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Cost Shifting
Share of Total Revenues
60%
54%
49%
50%
40%
40%
34%
30%
20%
10%
0%
2000-2001
Property Tax
2006-07
State Adequacy
Applied Economic Research
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Reliance on Property Tax Soars as
Other Revenue Sources Fall Short
Local Taxation
Tuition, Food, & Other Local Revenue*
Adequacy Aid
Other State Sources
Federal Sources
Other
Total Net Revenues
2000-2001
2006-07
675,578,576
40,945,206
824,013,509
53,845,952
77,364,803
615,683
1,672,363,729
$1,330,587,674
$ 52,773,108
$ 835,317,199
$ 89,732,904
$ 137,549,092
$
552,883
$2,446,512,860
$
$
$
$
$
$
$
Change
Number Percent
655,009,098
97%
11,827,902
29%
11,303,690
1%
35,886,952
67%
60,184,289
78%
(62,800)
-10%
774,149,131
46%
Source: NH Department of Education
Applied Economic Systems
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Educational Funding FY 07
FY 07
0%
St Ed Tax
1
2
Local
State Gen
3
4
5
6
FY 07
State Ed Property Tax
364,000,000
State Gen Revenue
471,317,000
NHSAA
Federal Aid
137,549,092
Local School Tax
1,330,587,674
Other State Aid
89,732,904
Misc Revenue
552,883
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Is the tax obligation spread
evenly?
Do all communities need state
adequacy aid?
NHSAA
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Total Tax Payment
Town
Avg Home
Selling
Price MLS
Alton
233,590.00
10.57
2,469.00
83,426.00
21.96
1,831.00
Colebrook
104,346.00
21.79
2,272.00
Exeter
282,942.00
20.07
5,677.00
Bedford
334,416.00
18.99
6,350.00
Londondrry
305,313.00
18.22
5,562.00
Nashua
252,803.00
17.40
4,398.00
Newport
145,332.00
21.91
3,183.00
Berlin
2007 Total
Tax Rate
NHSAA
Total Tax Payment
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Declining State Revenues
NH Center for Public Policy Study
NH think tank says $495M budget hole possible 09-04-2008 NH think
tank says $495M budget hole possible By Norma Love, Associated Press
Writer | September 4, 2008 CONCORD, N.H. -A think tank says New Hampshire could be dealing with up to a $495 million
budget hole in three years depending on the economy and steps lawmakers
take to address the problem.The New Hampshire Center for Public Policy Studies
says in a report the deficit could be as little as $156 million or as much $495
million.
http://www.nhpolicy.org
NH Center for Public Policy
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NH Center for Public Policy
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What might be ahead?
A few qualitative observations….
NHSAA
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Some Qualitative Observations
 State revenues are stressing out (See NHCPP)
 Real estate transfer tax is down 15%
 Business profits (if not all revenues) tax will probably disappoint
 Demographics are unfavorable
 Enrollment is declining and population is aging—fewer school advocates
 In 1950’s 50+% were in public school K-12; in 2009 100% must be
serviced in public schools
 Increase in age 55+ housing
 “Special needs” students (IDEA, 504, at-risk and more) are on the rise
 Falling property values portend higher tax rates
 Does not affect spending, per se, but taxpayers are sensitive to the rate
 This is contrary to the recent experience of rising values and falling rates,
despite higher spending
 Slower pace of new construction
 Emergence of “tax caps”
Applied Economic Research and
NHSAA
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Some Qualitative Observations
Continued…..
 Counties (and towns and cities) may demand a larger chunk to fund
social services, especially nursing homes, jails, health services, fuel
and more
 Rising energy costs will compound the impact of rising health
insurance and NH Retirement cost pressures
 Increased scrutiny of expenditures by public
 Weight of the national economy on credit and bond markets will
impact public agencies
 Renewed efforts to shift and/or reduce state obligations (E.g CACR,
reduced aids…..)
 And more………….
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What can school leaders do to
stay ahead of the impact?
How do we protect vital services to
children and communities?
NHSAA
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Leaders can…..
Realize and understand current conditions.
Be transparent with all public groups
With both deliberations and possible impacts
Explain current revenue streams - especially
to Legislators
Model “stewardship” efforts
Share (and be open to) proven and new
ways of saving costs and extending
public resources.
NHSAA
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Is this an opportunity or “bump
in the road”?
Is this a chance to add needed
reforms and improvements that will
lead to long-lasting positive impacts
on improved student services?
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