A couple of weeks ago, we were hearing about a $260 million state budget surplus and some kind of tax relief package with conceptual support on both sides of the aisle. A few days later the estimated surplus was down to $160 million and support for current year tax relief has been dropping along with it.
Which sort of brings me back to where I left off with my last post. If the shrinking 2007-08 surplus is an indication that economic conditions are deteriorating more quickly or more severely than expected, I think the potential problems ahead for implementing the Education Cost Sharing (ECS) reforms adopted last year loom much larger.
The Minimum Budget Requirement (MBR) that came with the ECS reform legislation last year allows towns to use a portion of their ECS increase for tax relief or other municipal spending. I know this is not a popular provision in most educators’ minds. However, I can understand the reasoning behind the MBR as long as the following remains true: ECS aid must grow enough each year to reflect not only the actual increased cost of education, but also must be increased beyond that level if towns are to be allowed to take some money off the table if they choose without harming school budgets.
In FY2007, ECS aid increased $182 million—more than 11% above prior year funding. Under MBR rules, $104 million (including money set aside for Districts in Need of Improvement) was required to go to school spending, leaving towns with discretion over the remaining $78 million. It will be interesting to see when expenditures for 07-08 are reported to see how much school spending increased, but I expect we will see that many if not most towns funded school budgets above and beyond the MBR.
What worries me about the MBR is what may happen when ECS does not increase at a rate faster than school cost inflation. In 2008-09, the ECS increase is 4.4% ($80 million), not 11%. The SDE has not released the MBR calculation for school year 2008-09 to date, but if the proportions stay about the same, less than $50 million of the increase will be guaranteed pass through to school budgets. Clearly the smaller the ECS increase is, the more problematic the MBR will be for districts if towns opt for tax relief. And if the next biennium turns out as forecast, the pressure on all state spending, including ECS will only worsen. It would be ludicrous if ECS has to suffer through a another period of low growth with only about 3/5ths of the new money guaranteed for schools
Maybe MBR rules should be changed to earmark 100% of any ECS increase up to a certain %–say the first 5%–to school use, and then a percentage of any increase above that mark on a split basis to schools/tax relief. I think something will need to be done at some point, if the state cannot get the ECS phase-in back on a faster track.
1 response so far ↓
Roch J. Girard // March 19, 2008 at 9:27 am
The 07 ECS grant was indeed welcomed and needed. However, when you give a grant which is meant for EDUCATION use, ALL of the funding should go to the intended purpose. The “historic amount of money” heralded by the Governor, et al, did NOT go exclusively to the municipal education funds. Some 78 million dollars were diverted from their real goal–to fund education–and were used by communities for tax relief, pot hole repairs, etc. ESC money should go DIRECTLY to municipalities to be used ONLY for public education needs. In fact the ECS Grants should be indexed and have a built in COLA attached each and every year.
To use designated funding for purposes other than the intended target only makes our frustration grow even more. As educators we cannot continue to do more, with less, and do it all on time. The need for full funding continues to be, and should be, our TOP priority.