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School Finance

Student Loan Debt May Put Young Adults in Financially Precarious Standing

May 13, 2013
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Student loan debt has been in the news a lot these days. In the last week, a number of news outlets wrote about mounting student loan debt and the delaying of life events by their borrowers (see ABC News, the Chronicle of Higher Education, CNN Money, the NY Times [here and here], and the Wall Street Journal, to name a few). The article in the NY Times provides a great example of this, "Consider Shane Gill, a 33-year-old high-school teacher in New York City. He does not have a car. He does not own a home. He is not married. And he is no anomaly: like hundreds of thousands of others in his generation, he has put off such major purchases or decisions in part because of his debts."

A New Way to Track Pre-K—Hourly: Part 2

May 10, 2013
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In a blog post from earlier this week I examined the issues of funding streams and dosage. We currently have no way to track a state-funded pre-K center’s level of funding or the different ways it is funded. We also have no reliable way of measuring how some pre-K programs supervise children for much longer than others because we rely on a vague binary measurement of “half-day” versus “full-day”. In this post I will explain how we can fix these problems.

Last Year the “Worst in a Decade” for High-Quality Pre-K, Annual Report Finds

April 29, 2013

State pre-K funding shrunk by over half a billion dollars from the 2010-11 to the 2011-12 school year. That was the largest one-year decrease in the last 10 years, leading the National Institute for Early Education Research (NIEER) to declare it the "worst year in a decade” for high-quality pre-K access across the United States.

Doing the Math: The Cost of Publicly Funded ‘Universal’ Pre-K

March 19, 2013

The post originally appeared on our sister blog Early Ed Watch.

During the media frenzy that followed President Obama’s unprecedented call for expanding pre-K to all four-year-olds in the United States, we estimated that the additional cost to states and the federal government, combined, to be somewhere between $10-15 billion per year. We estimate that the feds and the states currently spend about $9 billion on pre-K for four-year-olds.

We wanted to explain exactly how we came to that conclusion.

According to the National Institute for Early Education Research (NIEER), there were approximately 4.1 million four-year olds in the U.S. as of July 2011.  But we shouldn’t assume that 100 percent of those 4.1 million children would participate. Even in states that provide pre-K to any family that wants it, such as Oklahoma and Florida, not all families choose to send their children, and currently about 75 percent are enrolled. Therefore, we predict approximately 75 percent of four-year olds would be enrolled nationally if pre-K were truly universal in all states. That means we are talking about funding pre-K for a little under 3.1 million four-year-olds around the country.

Next we determined a reasonable cost per child.  This, of course, varies by state. (Teacher pay will vary depending on supply and demand, not to mention cost-of-living in a particular area, for example.)  But we do know that the average per-pupil expenditure for children enrolled in Head Start in 2012 was $7,581 (excluding Early Head Start, which is for children under 3 and their mothers).  We also know that the Obama Administration appears to be aiming for a full-day (not a half-day) pre-K program, and that the average spending on a full day of instruction for K-12 students nationally is $12,442 per pupil, according to NIEER.  State-funded pre-K programs of decent quality cost $2,640 to $11,699, with the average at $6,408.* So we round up to $8,000.


By using this formula, we conclude that it would cost $24.6 billion per year to fund a “universal” public pre-K program for all four-year-olds. However, we estimate that states and the federal government already spend about $9.24 billion on pre-K for four-years olds.

Here’s how we got to that number, which we came to through a lot of deduction, so we want to be clear that it’s only an estimate.

States spent about $5.49 billion on state-funded pre-K programs in 2011. (Some of that includes federal funding from  TANF, according to NIEER data, so it is not purely state funding).  In 2011, The federal government spent $7 billion on Head Start (excluding Early Head Start), special-education preschool services (known as IDEA Preschool within the the Individuals with Disabilities Education Act), and other sources.** Add 5.49 and 7, which is 12.49. Using NIEER data, we know that 74 percent of children enrolled in these publicly funded programs are four year olds. So we multiply .74*12.49 to get to the $9.24 billion number.


So given how much is already spent on pre-K, total new costs would be closer to $15 billion.


There are many caveats to these numbers. Three and five-year olds tend to sneak into some of these numbers on the margins. There are also other forms of funding that we may not be capturing. Lastly, simply taking the full cost of programs and multiplying them by the percentage that is four-year olds is “back-of-the-envelope.” It could cost more because there are certain fixed costs that can’t be multiplied by a percentage, or it could be less because it doesn’t account for efficiencies that are only achieved at a very large scale.

Furthermore, the numbers we are using are also closer to an ideal world of full, universal, high-quality pre-K, so we think that our estimate is on the high end. Therefore we feel comfortable estimating the additional cost to be somewhere between $10-15 billion.

What do you think about our number? Too high? Too low? Let us know.

*We define a program as “high quality” when it meets at least seven of NIEER’s ten benchmarks.

** In 2011 the federal government spent $6.3 billion on Head Start (excluding Early Head Start) and $373.4 million on IDEA 619 (preschool). We round up because some IDEA part B money probably helps fund preschool IDEA programs and there are other federal structures, such as Title I, where some of the money may go to preschool but the numbers are not broken down for us.

Court Ruling Finds Texas Public Schools Funding Inequitable, Unconstitutional

February 12, 2013

Last week, a district court in Texas ruled in favor of more than 600 Texas school districts, finding that the state’s education finance system is unconstitutional. This is nothing new for Texas – all told, six school finance lawsuits have been tried against the state since 1984, the last in 2005. Each round of lawsuits has prompted the legislature to tinker with the funding formulas. That has added complexity and apparently exacerbated underlying inequities.

Using data and statistics from the New America Foundation’s Federal Education Budget Project (FEBP), we were able to reveal that the inequities across Texas school districts are in fact significant. Worse yet, the inequities have indeed increased over the past several years.

The latest litigation in Texas was brought on by $5.4 billion in cuts that the legislature made to public education in the 2012-13 biennium. The cuts break down into three figures: (1) $2.2 billion from shifting public funds for schools to the 2014-15 biennium; (2) $1.8 billion from assuming no student enrollment growth over the two years; and (3) $1.4 billion from the elimination of programs such as the state pre-kindergarten grant program, as well as reductions in many other public education programs.

While these cuts sparked the latest lawsuit, the districts involved in the suit have indicated that restoring these funds would not be enough to fix the broken system. The court ruled that the state not only provides insufficient funding for education, but that it is unfairly distributed to school districts. In other words, increasing funding through an inequitable formula does not, by definition, make education spending more equitable.

The FEBP data make that abundantly clear. In 2006, per-pupil spending in Texas varied on average 9.3 percent, or $693, from district to district. Three years later in 2009, per-pupil spending varied on average 9.7 percent, or $831, from district to district. And this growing disparity is even more evident at the local level.

Consider Penelope Independent School District. According to the National Center for Education Statistics, the Waco-area district is relatively property-poor – it gets only 14 percent of its per-student revenue from local taxes. And overall, it spent just over $9,300 per student in 2009 (slightly above the state average). Meanwhile, Glen Rose Independent School District outside of Dallas received more than 83 percent of its per-pupil revenue from local sources. That district spent more than $11,300 per student in 2009.

But those figures don’t necessarily align with the two districts’ needs. Whereas nearly 75 percent of Penelope ISD’s student body was eligible for free and reduced price lunches (a proxy for student poverty), only about 40 percent of Glen Rose ISD’s students were eligible. Penelope students struggled more in 2009 state achievement tests, too, with only half of fourth-grade students proficient in reading and math, while Glen Rose fourth graders were 88 and 95 percent proficient in reading and math, respectively.

Of course, research has shown that the payoff from spending more money on students is not always improved academic success. But wealthier districts tend to be at an advantage in hiring more experienced teachers and providing extra support services. Fair and equitable funding should be an essential element of state education policies.

The inequalities in Texas’s school finance formulas are mirrored in federal and state funding formulas around the country – and this week’s ruling is just the latest update to a long history of attempts to ensure equal access to quality education.

Click here to search for your state or school district.

Friday News Roundup: Week of January 28-February 1

February 1, 2013
New Mexico faces loss of up to $93M in federal special ed funds for violating grant terms
Controversial California school bonds create ‘debt for the next generation’
Cost-cutting measures could save University of Texas $490 million in 10 years, panel says
Education reform aims to expand Ohio voucher program, reduce funding gaps
New Mexico faces loss of up to $93M in federal special ed funds for violating grant terms
Between $43.5 million and $93.0 million could be withheld from New Mexico’s federal special education grants in future years. The state has reduced spending in recent years on special education programs that receive federal funding in violation of the U.S. Department of Education’s “maintenance of effort” requirements, which aim to prevent states from replacing state funding with federal money. The state reduced spending below prior-year expenditures on special education by $15.3 million in 2010, and again by $28.2 million in 2011. New Mexico requested a waiver in August 2012 from the maintenance of effort provision for both fiscal years, citing unforeseen state financial resource constraints. The state recently learned, however, that it may not receive that waiver, and will instead be penalized for its decreased spending. The budget uncertainty has legislators concerned about moving forward with education appropriations for fiscal year 2014. More here…
Controversial California school bonds create ‘debt for the next generation’
Faced with a growing need for additional school facilities and taxpayers’ unwillingness to fund new capital projects, many California school districts have moved toward an unconventional form of funding to finance major projects: capital appreciation bonds. The bonds have allowed districts to borrow billions of dollars while delaying repayment; in some cases, payments are deferred for several decades. For instance, the Napa Valley Unified School District took out a $22 million loan in 2009, but will not begin making payments until 2030. That means that by the time the debt is repaid in 2049, it will have cost over seven times the amount borrowed, or $154 million. According to data compiled by the California Treasurer, Bill Lockyer, more than 400 districts in California have incurred over $9 billion in capital appreciation bond debt, which will cost taxpayers $36 billion over the next four decades. Other states, including Michigan, have prohibited this type of borrowing. More here...
Cost-cutting measures could save University of Texas $490 million in 10 years, panel says
As the University of Texas requests increased state appropriations for basic operations, capital investment, and financial aid, it also hopes to demonstrate a commitment to cost-cutting. Some of the proposals the administration is considering include consolidating purchasing systems, selling excess electrical power, charging more for room and board, and other measures that cut costs or increase revenues. These proposals would save the university over $490 million in the next decade – ranging from $92 million from selling surplus electricity from the school’s natural gas-fired power plant to $200 million from centralizing human resources, information technology, and finance and procurement functions. University President Bill Powers indicated that the recommendations will not interfere with faculty and teaching. More here…
Education reform aims to expand Ohio voucher program, reduce funding gaps
Ohio Governor John Kasich has introduced a $15.1 billion school funding plan for fiscal years 2014-2015 that seeks to reduce spending gaps between poor and wealthy school districts. Property tax is a highly variable source for education funding, so the governor’s plan creates a minimum funding level for all districts across the state, decreasing that variability. Specifically, all districts would have a funding level equivalent to $250,000 of property value for each pupil within the district. The plan also expands the state’s tax-funded voucher program for low-income students, available for any entering kindergartener with a household income below 200 percent of the federal poverty level. The vouchers would be worth up to $4,250 per year and could be used at any participating private school – schools would not have the option to charge tuition beyond the voucher amount. The plan budgets for $8.5 million in voucher support the first year, and $17 million in the year following. More here…

In The Tank: Financial Aid: A System Designed to Fail

January 29, 2013
Every parent of college-aged kids fears the eye-popping complexity of applying for financial aid, but that complexity can actually end the college dream – and the American dream - for some students. In this In the Tank Podcast, New America Managing Editor Fuzz Hogan talks to Education Policy Program Director Kevin Carey and Schwartz Fellow Jason DeParle about some of those stuck students, and discusses how better policy can help fix the crisis.

Friday News Roundup: Week of January 21-25

January 25, 2013

Cal State system has $250 million funding gap

Bill giving Colorado illegal immigrants in-state tuition passes test

Michigan school funding proposal would seek more financial equality among districts

Federal funding cuts threaten Nevada Department of Education


Cal State system has $250 million funding gap

Friday News Roundup: Week of December 31-January 4

January 4, 2013

Despite surplus, Michigan may need to cut school spending in 2013

Connecticut task force recommends significant changes to district funding formula

California Governor Jerry Brown to propose major changes to district funding allocation

Maine governor orders $35.5M in temporary state spending cuts, including $12.6M in school aid

Despite surplus, Michigan may need to cut school spending in 2013
In spite of a $1.04 billion dollar surplus for fiscal year 2012, Michigan may have to cut education funding for 2013 by $150 per student, according to a new report from the Michigan Senate Fiscal Agency. Revenue has decreased significantly this year after Michigan enacted a law that eliminated $1.8 billion in business taxes in an effort to spur economic growth in a state plagued by high unemployment rates. The Senate Fiscal Agency report claims that the economy did not grow as much as it had predicted back in May, thus decreasing projected revenue and increasing the cost of the tax cuts. Now, lawmakers will not be able to use the fiscal year 2012 surplus to plug holes in the current 2013 budget, as they had planned. More here…

Connecticut task force recommends significant changes to district funding formula
A task force established by Connecticut Governor Dan Malloy, the Governor’s Education Cost Sharing Task Force, will recommend drastic changes to the formula that allocates $1.9 billion of state funds to school districts. The new formula could double or triple funding to underfunded school districts such as Bridgeport and Norwalk. The group’s recommendations would alter the formula to include more recent household income data, use free and reduced-priced lunch enrollment to measure poverty in each district, and more equally weigh income and property values in the formula. The proposal also includes a strong endorsement of magnet and charter schools, as well as technical high schools. It acknowledges the state’s fiscal constraints in recent years, but calls for full funding of the education formula within six years. At least one outside organization, the Connecticut Conference of Municipalities (CCM), praised the report, saying that it addresses many of the concerns highlighted by CCM in recent years. More here…

California Governor Jerry Brown to propose major changes to district funding allocation
California Governor Jerry Brown hopes to shift the method of funding schools in California to streamline bureaucratic costs and target more funds to low-income students and English language learners. Besides attempting to make the funding system more equitable by re-appropriating funds to the neediest students, Brown hopes to eliminate cumbersome rules that limit how local school districts can spend money. Nearly 40 percent of state and federal funds are earmarked for a specific program, according to a study from the Public Policy Institute of California; the California Department of Finance found that in fiscal year 2012, 56 of those programs accounted for $11.8 billion of the state budget. Brown’s proposed reforms, which he postponed until after a November referendum to increase taxes for education and other programs, are expected to face resistance from multiple fronts. More here…

Maine governor orders $35.5M in temporary state spending cuts, including $12.6M in school aid
Maine Governor Paul LePage this week issued an order to all state agencies to cut $35.5 million to the current fiscal year 2012-2013 budget because state revenue projections fell short of predictions. Of the $35.5 million cut across state agencies, a large share – $12.6 million – will come from state funds directed to schools. Many school districts had begun planning for the budget cuts at the beginning of December, when new revenue projections led state Finance Commissioner Sawin Millett to recommend such a “curtailment” to the governor. However, per state law, the cuts are temporary and must be applied as evenly as possible to all state programs until the state legislature passes its own spending package. The governor’s office plans to propose another budget plan to resolve a $100 million shortfall in Maine’s Medicaid program at the same time it proposes the fiscal years 2014-2015 biennial budget later this month. The legislature reconvenes next week on January 8, and plans to take up the supplemental budget soon. More here…

Friday News Roundup: Week of December 10-14

December 14, 2012

Indiana higher ed commission wants tuition increase held at inflation

Louisiana’s Jindal administration to announce $129 million in cuts; colleges and health care expected to take big hits

Alabama’s two-year college system seeks $478 million in state funds for next year

Missouri lawmakers consider higher ed funding formula

Indiana higher ed commission wants tuition increase held at inflation
The Indiana Commission for Higher Education this week recommended that the state’s seven public universities hold their increases in tuition and fee costs at or below the rate of inflation over the next two years. The minimal increases in tuition would be a shift for the state university system – one school, Purdue, increased its tuition for in-state students by 4.5 percent  in each of its two most recent two-year tuition hikes. The commission’s recommendation was made in the context of its request for a 7.5 percent, or $128 million, increase in state funding for colleges, financial aid, and capital spending in the forthcoming biennial budget, which will cover fiscal years 2014 and 2015. The commission members are requesting the increase because Indiana lawmakers have cut spending in recent years. A 7.5 percent increase would restore higher education spending to fiscal year 2010 levels. More here…

Louisiana’s Jindal administration to announce $129 million in cuts; colleges and health care expected to take big hits
Because of a budget shortfall that has arisen over the past six months of the current 2013 fiscal year, Louisiana Governor Bobby Jindal is preparing to announce and implement mid-year spending cuts. According to the Louisiana Revenue Estimating Conference, the shortfall totals $129.2 million this year. Governor Jindal has the authority to make mid-year cuts without lawmakers’ input, provided he does not cross a certain threshold amount, so state legislators will not be able to target the cuts to specific programs. The state’s colleges and health care programs are the largest programs not protected by law from spending reductions, making them the ripest areas for savings and, therefore, cuts. This is the fifth consecutive year in which Jindal has instituted mid-year budget cuts. More here…

Alabama’s two-year college system seeks $478 million in state funds for next year
This week, newly-appointed Chancellor of the two-year college system in Alabama Mark Heinrich requested a 29 percent funding increase from the state for fiscal year 2014, a total of $478.3 million. The request includes $410.7 million for operations, as well as additional funding for capital expenses and maintenance costs. The system has seen significant budget cuts in recent years, so the 29 percent funding bump would restore spending levels for the system to pre-2008 levels, according to the chancellor. A large portion of the budget request would go to a workforce program that provides financial incentives to employers who hire students while they are attending community college. More here…

Missouri lawmakers consider higher ed funding formula
A plan presented this week by staff to the Missouri Legislature’s Joint Committee on Education would reformulate higher education spending and allocate a segment of it according to colleges’ and universities’ performance. The proposal is designed to provide incentives for colleges to improve their performances, much as the state does for a portion of K-12 education funding, rather than base funding exclusively on past allocations and the total available dollars, which is how money is currently allocated to postsecondary institutions. Under the new proposal, the state would fund 35 percent of schools’ operating costs. Of the remaining amount, 90 percent would be allocated automatically, and 10 percent by performance goals. Performance metrics may include student retention, graduation rates, and job placement records. The committee has an official mandate to redesign the funding formula by the end of 2013, but the proposal unveiled this week is only one option under consideration. More here…

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