1. March 4, 2011 Austin, Texas Michael Griffith Senior Policy Analyst Education Commission of the States 1

2.  The only nationwide education interstate compact  Founded in 1965 to enlighten, equip and engage education policy makers  53 member states, territories and the District of Columbia  Web Site: www.ecs.orgwww.ecs.org 2

3.  Education spending – A national picture  What does this mean for your state?  How can you still support your education mission in this environment? 3

4. FY 2011-2012 will be the worst budget year since the Great Depression 4

5. Yes, Wyoming 5

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7.  American Reinvestment & Recovery Act ($100 billion)  Funding: Early Learning ($2 bill)  K-12 ($70 bill)  Higher Ed. ($28 bill)  Education Jobs Fund (Edu-Jobs) ($10 billion)  States must distribute the funding in FY 2010-11 but districts have until FY 2011-12 to spend it. 7

8. Fiscal Year 2007-08 2010-11* State 47.9% 40.3% Local 43.3% 44.0% Federal 8.8% 15.7% Each 1% swing in funding represents $5.7 billion *Estimated 8

9. 9 NCLB ARRA & Edu - Jobs

10. Pensions Health Care 10

11.  Pensions ◦ Teacher Pensions: Pew estimates that there is a $500 billion shortfall nationwide.  Health Care Costs: ◦ Account for up to 10% of all K-12 spending ◦ These costs are increasing by a rate of 10% to 15% each year 11

12. Can anything be done about health care and pension costs? 12

13. Other than cutting benefits what can states do?  Move new employees to defined contribution plans – like 401k plans  Create hybrid systems  Increase vesting time for new employees  Close loopholes in the system 13

14.  What can state’s do other than cutting services or increasing employee contributions?  Move to joint purchasing: ◦ Some states have look at mandating that all school districts participate in a health care pool 14

15. What We Need are Solutions! 15

16.  Salaries & benefits drive education costs: ◦ 65% - educator salaries & benefits ◦ 15% - other staff salaries & benefits  Benefits alone account for 20% of education spending  Total administrative costs account for 7.5%  Transportation costs account for 4.2%  Instructional supplies (including textbooks) 3.3% 16

17.  Promote school district purchasing co-ops ◦ A study in Delaware found that if school districts pooled their purchasing power, they could reduce their costs from 8% to 14%.  Encourage districts to work together to educate high- need special education students. ◦ Studies have found that this can result in both improved quality of education and reduce costs. 17

18.  Texas: Combining services  The state is providing financial incentives to districts that are willing to combine services  School district consolidation  Maine has been working on this over the past 3 years  Kansas, Michigan and other states are currently reviewing this option  Iowa provides financial incentives to districts to consolidate 18

19.  Some districts are moving to a four-day school week  ECS has found that 120 districts (less than 1% of total) make use of a four-day week  Districts who move to a four-day week tend to save less than 3%  In 2009-10 Hawaii shortened it’s school year by 15 days  Teachers are donating 6 days in order to eliminate 15 furlough days  Banks provided funding to schools to help them bridge the gap 19

20.  Adopting New Funding Systems  Ohio and Rhode Island in 2010  Pennsylvania in 2009  All three states took the opportunity to streamline their systems  New York has recently allowed districts greater flexibility in spending 20

21.  California: Changing Kindergarten Start Date ◦ California is pushing date from Dec 2 nd to Sep 1 st ◦ This will reduce Kindergarten enrollment by 100,000 ◦ State grants will be made available for Early K programs ◦ This change will produce $700 million in savings 21

22. Or Are bad times the new “Norm”? 22

23.  Traditionally it takes 18 to 24 months for state budgets to recover after a recovery begins  Most economist agree that a recovery started in 3 rd or 4 th quarter of 2009  If this recovery holds education budgets will begin to see improvement in mid to late 2011 23

24.  For the first time in four years state income and sales tax revenue has increased for three straight quarters. 24

25. 303-299-3619 mgriffith@ecs.org www.ecs.org 25