Last year at this time the Governor’s proposed budget for the 2007-09 biennium included $265 new education dollars in FY 2008 and an additional $210 million in FY 2009—a 20% combined hike in state education spending.

The lion’s share of the increase was in education grants to towns—most notably the Education Cost Sharing grant. Acting on the recommendations of the 2007 ECS Task Force, the Governor had earmarked $383 million (81%) of the $465 million total 2-year education increase to ECS. Unprecedented in the grant’s troubled history, the proposed amounts would amount to a 24% increase in ECS over the biennium, and accomplish 35% of the $1.1 billion increase the Task Force had called for in its recommendations to the Governor.

For someone like me, who had seen ECS through all the lean years, this proposal seemed too good to be true. In fact it did turn out to be a little too good to be true, but the amounts ultimately appropriated in the 2007-09 biennial were still unprecedented—a $182 million increase in FY08 and $80 million on top of that for FY2009. That’s a 16% boost over 2 years—a pretty hefty raise by any standard.

So what’s the problem you ask? Best case: none that can’t be overcome, but less than best case—a direction that all reasonable economic forecasts indicate—I see several.

First, instead of achieving 35% of the goal toward the proposed target ECS grant, the current biennial budget only gets us 24% of the way there. This pace, if maintained, means at least 4 budget cycles (4 x 24% = 96%) to reach the target rather than the 3 cycles that would be needed if the originally proposed increase had been adopted and maintained (3 x 35% = 105%) going forward.

Second, the foundation level—designed to reflect the per pupil cost of basic education programs—was set in the revised formula at the 2006-07 spending level, but with no cost inflation factor. Even with the originally proposed 5-6 year phase-in timeline, the foundation would lag actual costs at full phase-in; a phase-in of 8 years would leave the ECS foundation even further behind actual costs.

Third, the reduced phase-in pace may be further slowed if the economic conditions facing the state in the next biennial cycle meet gloomy expectations. Past history tells me this is a real threat to ECS reform implementation.

Fourth, the revised ECS grant requires less than 60% of new money to go to education. Towns—except for special restrictions on those cities with schools identified as needing improvement—can use the balance for tax relief or other municipal services. For many observers, This Minimum Budget Requirement (MBR) provision was not unreasonable in the context of the $182 million ECS increase this past year—given the many years prior during which ECS was under funded and towns had to raise a disproportionate share of education budgets from local taxes. However, MBR rules will shrink the coming year’s $80 million increase to $48 million of required education spending, less than half of the guaranteed amount for 2007-08. Next time I will take a closer look at the MBR program for 2008-09, and why changes may become necessary if in fact ECS funding gets squeezed in the years ahead.