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Spending data show the U.S. has not been defunding public education – Reason Foundation

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One of the most common narratives around K-12 education in the U.S. is that some states have persistently underfunded their public schools over the last two decades. For example, Randi Weingarten, president of the American Federation of Teachers, the nation’s largest teacher union, wrote a piece titled, “The high cost of defunding public education.” Similarly, when calls to “defund the police” began surfacing last year, high school social studies teacher Stephon J. Boatwright penned a piece for Education Week arguing that defunding the police isn’t such a novel idea since the United States has been defunding education for years.

But is this narrative true?

When looking at the data, the verdict is clear: nearly every American state has increased per-pupil revenues in the last two decades, often by substantial margins.

Reason Foundation’s new K-12 Education Spending Spotlight lets users easily examine the data for themselves. Pulling from school finance data published by the U.S. Census Bureau, the interactive dashboard allows users to examine state-by-state education spending patterns from FY 2002 to FY 2019 (data from the 2018-2019 school year is the latest continuous data from the Census Bureau). The spending figures included in the dashboard are inflation-adjusted. 

Nationwide, K-12 education revenues increased by 23.8%, or by $3,005 per pupil, on average from 2002 to 2019. Twelve states, including California, Washington, Louisiana, and New York, along with the District of Columbia increased their per-pupil revenues by 30% or more since 2002. Eleven more states, including Colorado, Montana, New Jersey, and Massachusetts, increased per-pupil revenues by at least 20% over the same period.

To be fair, a handful of states were stagnant spenders in the last two decades. Namely in Georgia, Indiana, North Carolina, Idaho, and Arizona education revenues have been virtually flat, and seven others have seen only modest increases between 5% and 10% per pupil from 2002 to 2019. The summary figures for every state are shown in Table 1 below.

Table 1: Per Pupil Revenue By State

State 2019 Per Pupil Revenue % Change since 2002 % Change since 2009
Alabama $                              11,400 13.62% 0.27%
Alaska $                              19,528 32.62% -0.15%
Arizona $                              10,314 1.20% -1.58%
Arkansas $                              11,735 18.24% -0.30%
California $                              16,872 37.43% 23.39%
Colorado $                              13,749 23.36% 14.57%
Connecticut $                              24,662 46.01% 20.31%
Delaware $                              18,529 26.36% 9.55%
District of Columbia $                              31,109 31.62% 45.92%
Florida $                              11,204 6.30% -5.96%
Georgia $                              12,931 2.60% 0.62%
Hawaii $                              17,237 18.43% -2.52%
Idaho $                                9,294 -0.81% -3.25%
Illinois $                              18,997 47.84% 29.25%
Indiana $                              13,110 1.54% -10.10%
Iowa $                              14,116 19.33% 5.53%
Kansas $                              13,815 19.77% -1.93%
Kentucky $                              12,844 27.99% 8.75%
Louisiana $                              13,728 33.94% -2.78%
Maine $                              16,963 27.45% 5.20%
Maryland $                              17,925 28.82% -2.45%
Massachusetts $                              20,917 26.82% 8.96%
Michigan $                              15,320 7.19% 8.32%
Minnesota $                              16,326 23.57% 9.26%
Mississippi $                              10,380 18.77% -1.36%
Missouri $                              13,262 15.12% 7.49%
Montana $                              13,744 26.34% 3.40%
Nebraska $                              14,266 15.52% 2.50%
Nevada $                              11,230 8.94% -7.63%
New Hampshire $                              19,283 51.39% 19.08%
New Jersey $                              23,621 26.50% 6.07%
New Mexico $                              12,384 9.99% -6.83%
New York $                              29,840 67.90% 22.50%
North Carolina $                              10,553 -0.79% -15.72%
North Dakota $                              16,428 51.83% 19.37%
Ohio $                              15,539 12.69% 2.81%
Oklahoma $                              10,629 6.47% -3.69%
Oregon $                              15,271 24.84% 19.15%
Pennsylvania $                              21,206 49.23% 19.63%
Rhode Island $                              19,169 29.88% 6.10%
South Carolina $                              13,925 17.50% 10.10%
South Dakota $                              12,203 17.69% 4.33%
Tennessee $                              10,746 17.79% 9.42%
Texas $                              12,881 14.05% 5.85%
United States $                              15,656 23.75% 8.32%
Utah $                                9,755 15.13% 3.94%
Vermont $                              22,424 43.49% 11.09%
Virginia $                              13,657 14.38% -4.70%
Washington $                              17,245 48.75% 26.98%
West Virginia $                              13,213 8.68% 1.95%
Wisconsin $                              14,582 5.12% -0.61%
Wyoming $                              19,152 30.55% -15.63%

Between 2002 and 2019, no state could be characterized as “defunding” public education. So where does the defunding education narrative come from? Reason Foundation’s K-12 Education Spending Spotlight illuminates two potential causes.

The Great Recession and State Education Spending

The first and most apparent explanation behind the narrative that the United States has underfunded public schools is that many states took substantial budget hits during the Great Recession, which officially ran from Dec. 2007 to June 2009, and saw slow rebounds in the years after the 2008 stock market crash. The rightmost column on Table 1 displays that, as of 2019, 18 states were still below their pre-recession spending levels from 2009. And of those states that had rebounded back by 2019, it had taken many of them several years to get there. Figure 1 shows how many states were below pre-recession revenue levels each year after 2009.

Chart 1: States Below Pre-Great Recession Per Pupil Revenue Level 1For this analysis D.C. is characterized as a state.

Figure 1 displays how some of the most severe education budget effects of the Great Recession weren’t felt until 2013 and that it has taken years for many states to rebound. Of course, this trend has been repeatedly pointed out by think tanks and groups advocating for more education spending. But there are problems with making any discrete point in time a benchmark for evaluating whether states are spending enough on K-12 education.

Prior to the Great Recession, K-12 spending had been steadily growing for decades. Unless you’re trying to make a specific point about the 10-year period from 2009-2019, picking 2008 or 2009 as benchmark years that all states should be held to is a rather arbitrary way to determine whether funding levels are adequate. Consistently reported education data is available going to 2002, so why not go with 2002? Moreover, if 2009 spending levels set the standard, it’s worth noting that a majority of states have increased education spending since that time. Should one conclude that the 32 states spending more per pupil than they did in 2009 are now overspending?

The unusually severe and drawn-out effects of the Great Recession are a key reason why spending advocates say education funding has been neglected in the last decade—but this criticism lacks some broader context. The Great Recession was unprecedented in the last half-century of K-12 school finance because it was the first time during that prolonged period that education budgets shrank. But education spending over the last 50 years has more than doubled in real per-pupil terms. Previous recessions in 1990 and 2001 weren’t as bad as the Great Recession and only brought brief stagnations in school funding followed by subsequent increases.

Stagnant Spending on Teacher Salaries

The second reason why many proponents of larger education spending argue that the United States has neglected education funding is the fact that teacher salaries have generally been flat for decades. Indeed, this fact is corroborated by Reason’s K-12 Education Spending Spotlight. From 2002 to 2019, spending on teacher salaries stayed around $4,900 per pupil nationwide. Meanwhile, nationwide K-12 spending increased by 23.8% during that period.

To be sure, instructional salary spending and average teacher salaries are not one and the same. For instance, the Spending Spotlight could show an increase in instructional salary spending per pupil in one state due to increased teacher hiring, not an increase in salaries. However, note that average pupil-to-teacher ratios were largely unchanged during the 2002-to-2019 time period, meaning that increased hiring doesn’t explain why teacher salaries have been flat while total instructional spending has risen. 

Table 2: Change in Instructional Salary Spending By State

State % Change in Overall Per Pupil Spending Since 2002 % Change in Per Pupil Instructional Salary Expenditure Since 2002
Alabama 13.62% -2.53%
Alaska 32.62% 3.85%
Arizona 1.20% -3.97%
Arkansas 18.24% 0.37%
California 37.43% 5.35%
Colorado 23.36% -2.57%
Connecticut 46.01% 20.96%
Delaware 26.36% 5.74%
District of Columbia 31.62% 51.99%
Florida 6.30% -5.89%
Georgia 2.60% -10.61%
Hawaii 18.43% 20.78%
Idaho -0.81% -12.30%
Illinois 47.84% 10.49%
Indiana 1.54% -17.96%
Iowa 19.33% 8.90%
Kansas 19.77% 12.15%
Kentucky 27.99% -3.22%
Louisiana 33.94% -3.40%
Maine 27.45% 11.87%
Maryland 28.82% 13.50%
Massachusetts 26.82% 22.55%
Michigan 7.19% -13.71%
Minnesota 23.57% 15.59%
Mississippi 18.77% 7.51%
Missouri 15.12% -2.65%
Montana 26.34% 13.29%
Nebraska 15.52% 16.32%
Nevada 8.94% -5.45%
New Hampshire 51.39% 31.29%
New Jersey 26.50% 2.04%
New Mexico 9.99% 0.02%
New York 67.90% 24.75%
North Carolina -0.79% -6.55%
North Dakota 51.83% 35.77%
Ohio 12.69% 8.82%
Oklahoma 6.47% -7.65%
Oregon 24.84% -0.21%
Pennsylvania 49.23% 6.09%
Rhode Island 29.88% 7.65%
South Carolina 17.50% -8.67%
South Dakota 17.69% 6.33%
Tennessee 17.79% -1.70%
Texas 14.05% -1.99%
Utah 15.13% -1.85%
Vermont 43.49% 20.08%
Virginia 14.38% 3.45%
Washington 48.75% 28.70%
West Virginia 8.68% -8.85%
Wisconsin 5.12% -6.57%
Wyoming 30.55% 19.10%

So where have the funding increases gone?

Notice that spending on instruction did increase by 18.6% from 2002 to 2019. But of the total increase in instructional spending, 7.1% went to salaries while 75.8% went to instructional benefits. The rest went to spending on other items like instructional materials or contractors. Additionally, some of the increased spending within the 2002-2019 window went to support services, which increased by 24.3% during that time frame. But these bumps to support services spending also went disproportionately to benefits.

To make a long story short: despite nationwide increases in education spending over the last few decades, much of this additional funding was diverted not to teacher salaries but to support services and more generally to retirement and health care benefits.

Will the Economic Impacts of the Pandemic Have Similar Effects on Education Funding as the Great Recession?

One limitation of the Spending Spotlight is that, due to lags in the Census data, the latest school finance figures don’t reflect the most recent revenue trends, notably the federal dollars sent to states during the COVID-19 pandemic. This is especially relevant since, shortly after lockdowns began around April 2020, researchers and economists initially warned that the pandemic could have dire consequences for state budgets. But as my colleague Marc Joffe pointed out, these grim economic projections never materialized for most states. In fact, according to recent research from analysts at the government relations company MultiState, state tax collections on average are up 12.1% In June, the MultiState researchers wrote:

“…overall, state revenues increased during the first three quarters of FY 21 during the pandemic compared with the same period in FY 20, prior to pandemic-induced shutdowns. Comparing these three fiscal quarters, states experienced a 12.1% net increase in total tax revenues in FY 2021…

Full revenue data for all 50 states for Fiscal Year 21 (FY 21) will not be available until September, but from the data which is available, it is clear that contrary to initial projections, the states collectively are awash in cash. Nearly every state reporting monthly revenue since April has exceeded projections by unprecedented percentages. And that is before factoring in hundreds of billions of dollars in state and local aid.”

While it may be too early to say whether the worst of the COVID-19 pandemic’s economic effects are behind us, there is now ample evidence that COVID-19’s impact on the stock market was nothing like the downturn of the Great Recession. Forthcoming data from FY 2020 and after are expected to show education spending increases continued after 2019 due to large influxes of federal COVID-19 stimulus funds and relatively strong state budgets despite the ongoing pandemic. Even relatively low education spending states like North Carolina, Arizona, and Indiana have increased education spending after the 2019 time period. Thus, it’s likely that any negative fiscal effects of the pandemic will be comparable to those of other previous recessions, not the Great Recession. In other words, the coronavirus likely won’t interrupt the prevailing trend of steady increases in K-12 spending. 

Reason Foundation’s K-12 Education Spending Spotlight tool gives policymakers and advocates of all political persuasions better insight into what has happened with K-12 finance in their states and nationwide. With the school finance facts in plain view, stakeholders should be better equipped to make policy decisions based on actual data rather than broad, and sometimes incorrect, narratives.

This content was originally published here.

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