1 The Economy And its possible impact on education and public service?????

2 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 Dr. Mark V. Joyce, New Hampshire School Administrators’ Association Special Acknowledgement to Russ Thibeault from Applied Economic Systems

3 The National Economy  What are the trends?  How may they impact public services?  What are the trends?  How may they impact public services?

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NY Times 9/24/089

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USA Today 9/25/0811

USA Today 9/25/0812

NHSAA13 What can we learn from these current trends?  Are these indicative of NH?  What might the impact be on NH?  Are these indicative of NH?  What might the impact be on NH?

NHSAA14 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?  What are the current conditions?  What might be ahead?  What can school leaders do to stay ahead of the impact?

NHSAA15 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?

Applied Economic Research16 Expenditures Rise Twice Rate of Inflation

Applied Economic Research17 Major Categories All Increase

Applied Economic Systems18 All Major Categories Rise Rapidly

Applied Economic Research19 Special Programs=Fastest Rate of Increase

Applied Economic Systems20 Education Expenditures Rise, Despite Declining Enrollment

NHSAA21 What are the Revenue Sources?  Where do they come from?  Are they predictable and sustainable?  Where do they come from?  Are they predictable and sustainable?

NH Department of Revenue22 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  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

23 Who really pays for Public Education? Lets look at the increase from

Applied Economic Research24 Property Taxes Fund The Increase

Applied Economic Research25 Cost Shifting

Applied Economic Systems26 Reliance on Property Tax Soars as Other Revenue Sources Fall Short

NHSAA27 Educational Funding FY 07 Local State Gen St Ed Tax

NHSAA28 Is the tax obligation spread evenly?  Do all communities need state adequacy aid?

NHSAA29 Total Tax Payment TownAvg Home Selling Price MLS 2007 Total Tax Rate Total Tax Payment Alton233, , Berlin83, , Colebrook104, , Exeter282, , Bedford334, , Londondrry305, , Nashua252, , Newport145, ,183.00

NH Center for Public Policy30 Declining State Revenues NH Center for Public Policy Study NH think tank says $495M budget hole possible 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. NH Center for Public Policy Study NH think tank says $495M budget hole possible 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.

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NHSAA33 What might be ahead?  A few qualitative observations….

Applied Economic Research and NHSAA 34 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 % 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”  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 % 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”

35 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………….  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………….

NHSAA36 What can school leaders do to stay ahead of the impact?  How do we protect vital services to children and communities?

NHSAA37 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.  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.

38 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?