Local Government Education Employment
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Local Government Education Employment Presentation Transcript

  • 1. Federal, State & Local Education Finances Nomura Global Media New York Field Trip 2012 New York City, New YorkThomas Gais & Lucy Dadayan May 22, 2012
  • 2. State revenue crisis is easing, but state-local fiscal crisis continuesRockefeller Institute of Government 2
  • 3. Worst state government tax declines in 5+decades - worse than 2001 recession Percentage Change in Real State Government Taxes & Real GDP vs. Year Ago 18% Real GDP 15% Real state tax revenue 12% 9% 6% 3% 0% -3% -6% -9%-12%-15%-18% Sources: U. S. Census Bureau (Quarterly tax collections); Bureau of Economic Analysis (real GDP). Notes: (1) % changes averaged over 2 quarters; (2) No legislative adjustments; (3) Recession periods are shaded.Rockefeller Institute of Government 3
  • 4. State Taxes are Improving While LocalTaxes Continue to Decline Year-Over-Year Change in Real State Taxes and Local Taxes 9% State Local 7% 5% 3% 1%-1%-3%-5%-7%-9%-11%-13% Sources: U.S. Census Bureau (tax revenue) and Bureau of Economic Analysis (GDP price index). Notes: (1) 4-quarter average of percent change in real tax revenue; (2) No adjustments for legislative changes.Rockefeller Institute of Government 4
  • 5. State income and sales taxes are recoveringLocal property taxes are weakening Real Tax revenue changes since start of recession 10 5 0 (5) (10) (15) (20) Sales tax (state) Income tax (state) (25) Corporate income tax (state) Property tax (local) (30) Notes: Income, sales, & corporate taxes for state governments, property taxes for local governments. Rolling annual totals. Source: Rockefeller Institute analysis of data from Census Bureau and Bureau of Economic Analysis.Rockefeller Institute of Government 5
  • 6. Property Taxes Trending Downward andAre Likely to Fall Further Real Percent Change in State-Local Property Taxes Since the Start of Recession21 1973-Nov 1980-Jan 1990-July 2001-March 2007-Dec1815129630 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16(3)(6) Notes: Four quarter moving averages. Source: Rockefeller Institute analysis of U. S. Census Bureau quarterly tax survey.Rockefeller Institute of Government 6
  • 7. K-12 Education Enrollment and FinancingRockefeller Institute of Government 7
  • 8. K-12 Enrollment as Share of TotalPopulation: Great Variation Across StatesRockefeller Institute of Government 8
  • 9. K-12 Enrollment: Percent Change, 2005-2010Rockefeller Institute of Government 9
  • 10. NCES Projects Large Pupil EnrollmentGrowth in West; Declines in NortheastRockefeller Institute of Government 10
  • 11. Real Per Pupil Expenditures14,000 Total exp. Instructional exp.12,00010,000 8,000 6,000 4,000 2,000 0 Sources: Rockefeller Institute Analysis of NCES and BEA data.Rockefeller Institute of Government 11
  • 12. Great Variation in Average Per-Pupil TotalSpending, 2009 TN OK MS ID UT AZ Median State Spending NC KY AR AL by Region IN SD NV ND FL Northeast $15,591 CO Midwest $12,017 CA MO MT WV South $10,168 MI West $11,033 IA TX KS GA SC OR WA NM LA OH WI VA NE IL MN NH ME HI PA RI DE MD MA VT CT AK NJ NY WY 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 20,000 Notes: Spending adjusted to inflation. Sources: Rockefeller Institute analysis of NCES and BEA data.Rockefeller Institute of Government 12
  • 13. Sources of K-12 Education Revenues, 2009US Total = $591.4 billion Local 43.6% State 46.9% Federal 9.6% Source: NCES.Rockefeller Institute of Government 13
  • 14. State Revenue as Share of Total K-12Revenues in 2009: Wide Variations IL NV Median State Share of SD MO FL Total Revenues, by NE RI NH Region ND PA CT IN MA Northeast 40% NJ VA TX Midwest 42% GA South 50% MD ME CO WI West 56% NY TN IA LA US AZ OH SC MT OR UT OK MS AR MI WY KY CA AL KS WV WA DE NC AK MN ID NM HI VT 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Source: Rockefeller Institute analysis of NCES data.Rockefeller Institute of Government 14
  • 15. Per-Pupil Federal, State, and Local RealRevenues, 1989-20097,000 Federal Revenue State Revenue Local Revenue6,0005,0004,0003,0002,0001,000 0 Sources: Rockefeller Institute Analysis of NCES and BEA data.Rockefeller Institute of Government 15
  • 16. Real Per Pupil Local Revenues: GrowingDivergence b/n Northeast & West States 18,000 Northeast Midwest South West 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Notes: States classified based on average real per pupil total expenditures from 1989 to 2009. Sources: Rockefeller Institute Analysis of BEA and NCES data.Rockefeller Institute of Government 16
  • 17. Real Per Pupil State Revenues, by Region16,000 Northeast Midwest South West14,00012,00010,000 8,000 6,000 4,000 2,000 0 Notes: States classified based on average real per pupil total expenditures from 1989 to 2009. Sources: Rockefeller Institute Analysis of BEA and NCES data.Rockefeller Institute of Government 17
  • 18. Real Per Pupil Federal Revenues, by Region 3,300 Northeast Midwest South West 3,000 2,700 2,400 2,100 1,800 1,500 1,200 900 600 300 0 Notes: States classified based on average real per pupil total expenditures from 1989 to 2009. Sources: Rockefeller Institute Analysis of BEA and NCES data.Rockefeller Institute of Government 18
  • 19. Real Per Pupil Total Revenues, by Region35,000 Northeast Midwest South West30,00025,00020,00015,00010,000 5,000 0 Notes: States classified based on average real per pupil total expenditures from 1989 to 2009. Sources: Rockefeller Institute Analysis of BEA and NCES data.Rockefeller Institute of Government 19
  • 20. Higher Education Enrollment and Financing Instability and Long-Run Shifts in Sources of FundingRockefeller Institute of Government 20
  • 21. Higher Education FTE Enrollment as Shareof Total Population: 2011Rockefeller Institute of Government 21
  • 22. Higher Education FTE Enrollment: PercentChange, 2006-2011Rockefeller Institute of Government 22
  • 23. Sources of Higher Education Revenues, 2011US = $143.8 billion ARRA Funds, 1.9% Net Tuition, 39.2% All State Support, 52.5% Local Taxes, 6.4%Source: State Higher Education Executive Officers.Rockefeller Institute of Government 23
  • 24. Total Educational Revenue Per FTE, FY 2011 WA FL MT CO UT CA KS ID Median Higher Education OH GA AZ Revenue per FTE OR LA IN NM HI Northeast $13,120 SD NH Midwest $10,545 WI NE SC South $11,664 WV NV MO West $ 9,869 MA IA US TN AR VA MS IL OK NY MN NC ND TX KY AL PA VT MI NJ MD ME RI CT DE AK WY 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 Source: Rockefeller Institute analysis of State Higher Education Executive Officers data.Rockefeller Institute of Government 24
  • 25. Higher education as “balance wheel” in state budgets:Volatility in state/local appropriations and growth of net tuition $9,000 $8,000 $7,000 $6,000 $5,000 State/local appropriations per FTE $4,000 Net tuition revenue per FTE $3,000 $2,000 $1,000 $- 1986 1991 1996 2001 2006 2011Rockefeller Institute of Government 25
  • 26. Public universities in South and West still rely heavilyon S/L govts—despite trends toward convergence9,000 9,000 South West8,000 8,0007,000 7,0006,000 6,0005,000 Net tuition 5,000 Net tuition4,000 State/local 4,000 State/local governments governments3,000 3,0002,000 2,0001,000 1,000 - - 2001 2000 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2001 2007 2009 2010 2011 2000 2002 2003 2004 2005 2006 2008Rockefeller Institute of Government 26
  • 27. Public higher education in Northeast & Midwest nowsplits costs between tuition & SLG appropriations9,000 9,0008,000 Northeast 8,000 Midwest7,000 7,0006,000 6,0005,000 5,000 Net tuition Net tuition4,000 4,000 State/local State/local governments governments3,000 3,0002,000 2,0001,000 1,000 - - 2001 2003 2000 2002 2004 2005 2006 2007 2008 2009 2010 2011 2005 2000 2002 2003 2004 2006 2007 2008 2009 2001 2010 2011Rockefeller Institute of Government 27
  • 28. Significant cuts in local government education employment Continued growth in state government education employment (largely higher education institutions)Rockefeller Institute of Government 28
  • 29. State & Local Government vs. Private Sector Employment During The Great Recession 2% Private State gov. Local gov. 1%Cumulative percent change since start of recession 0% -1% -2% -3% -4% -5% -6% -7% -8% Source: U.S. Bureau of Labor Statistics (CES, seasonally adjusted). Rockefeller Institute of Government 29
  • 30. Local Government Employment Has Declined Sharply Since the Great Recession 2.0% Local education Local non-education 1.5%Cumulative percent change since start of recession 1.0% 0.5% 0.0% -0.5% -1.0% -1.5% -2.0% -2.5% -3.0% Source: U.S. Bureau of Labor Statistics (CES, seasonally adjusted). Rockefeller Institute of Government 30
  • 31. Local Government Education Employment Hit Much Harder Than Past Recessions 12% 1973 1980 1990 2001 2007 10%Cumulative percent change since start of recession 8% 6% 4% 2% 0% 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 -2% -4% Months since start of recession Source: U.S. Bureau of Labor Statistics (CES, seasonally adjusted). Rockefeller Institute of Government 31
  • 32. State Government Education Jobs Continued toIncrease in The Great Recession 6% State education State non-educationCumulative percent change since start of recession 4% 2% 0% -2% -4% -6% -8% Source: U.S. Bureau of Labor Statistics (CES, seasonally adjusted).Rockefeller Institute of Government 32
  • 33. State Government Education Employment Grew 4%, Weaker Than Past Recessions 18% 1973 1980 1990 2001 2007 16%Cumulative percent change since start of recession 14% 12% 10% 8% 6% 4% 2% 0% 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 -2% Months since start of recession Source: U.S. Bureau of Labor Statistics (CES, seasonally adjusted). Rockefeller Institute of Government 33
  • 34. Looking forward K-12 education financing is strained in several ways:  weakness of local revenues—property tax no longer a cushion for schools seeing drops in state assistance  volatility in state revenues—less predictability, with implications for workforce  population of school age children increasing in states with lower fiscal capacity, smaller state budgets, economies harder hit by recession Higher ed spending is growing but not through govt appropriations; funded increasingly through tuition and thus affected by many factors, e.g., changes in federal loans/grants, interest rates, jobs, personal income Federal funds/policies may become more important as state differences grow in K-12 financing and as higher education revenues are privatized Yet federal support for all levels of education is, at best, vulnerable—to sequestration process, political immobilism, focus of budget balancing efforts on discretionary programs (fed education programs except some student loans are non-defense discretionary and thus subject to caps) Biggest problem, however, is state fiscal systems: shrinking and volatile revenue base, competition for resources from health care programs, etc.; and persistent regional patterns, which raise hard issues for federalismRockefeller Institute of Government 34
  • 35. RockefellerInstituteThe Public Policy Institute of theState University of New York411 State StreetAlbany, NY 12203-1003www.rockinst.orgThomas L. GaisDirectortgais@albany.edu(518) 443-5831Lucy DadayanSenior Policy Analystldadayan@albany.edu(518) 443-5828