States to residents, localities: forget promises to restore funding
June 6, 2012 — When Wichita Public Schools Superintendent John Allison learned that, thanks to rising revenues, Kansas was projected to have a budget surplus of more than $300 million at the end of the year — the state’s first surplus since the recession — he hoped that the legislature would use the money to restore the hundreds of millions of dollars that it had cut from education in the last three years.
From 2008 to the end of the current fiscal year on June 30th, Kansas will have slashed school funding by nearly $700 per student, a decline of more than 12 percent in inflation-adjusted dollars. In Wichita, the state’s largest school district, those cuts came to about $60 million of its $600 million budget, Allison said, and translated into large-scale layoffs; the closure of five schools; the elimination of programs such as driver’s education, art, and music; the curtailment of professional development for teachers; and the deferral of necessary maintenance to school buildings.
“We couldn’t take another year like the last three,” Allison said. When news broke about the surplus, “We thought, ‘Finally, things are going to start getting back to normal.’”
But lawmakers in Kansas had different ideas. In the final days of the legislative session last month, they used the surplus to justify the largest tax cut in the state’s history. Among other changes, the cuts reduce the top rate to 4.9 percent from 6.45 percent, and are projected to cost $3.7 billion over the next five years, converting this year’s surplus into long-term budget deficits that could total $2.5 billion by 2018.
Meanwhile, Kansas’s schools will receive a modest increase of $58 per student next year, an amount that Allison said “does not even meet inflation, and is a drop in the bucket compared with the cuts we’ve taken.”
That has left Allison feeling betrayed. “Over and over, we heard from our elected officials that this was the worst recession since the Great Depression, and they had no choice but to cut school funding,” he said. “We were told that once the economy improves, our funding would be restored. But this year, when they did have a choice, a very clear choice, they decided that tax cuts were more important than education.”
Since education funding makes up the largest part of the state budget, Allison expects further cuts in coming years as state revenue falls. “That’s going to mean more layoffs, more schools closed. The kids are going to feel it,” he said. “The light at the end of the tunnel has suddenly disappeared.”
“We have no choice”
When the recession hit, state revenues — made up primarily of sales and income taxes — declined dramatically, prompting deep cuts to state services. In at least 30 states, funding for K-12 education was lower in fiscal year 2012 than in 2008, despite growing student populations. States have also made deep cuts in health care programs and in higher education funding. State aid to local governments has declined, and state and local governments have shed more than 500,000 jobs since the beginning of 2009.
In state after state, politicians justified the large budget cuts on the grounds that the condition of the state budget made it temporarily necessary to reduce services.
For example, when Arizona was facing a budget deficit of more than $2 billion in 2010, state lawmakers closed the budget gap by tightening eligibility requirements for Medicaid — eliminating health insurance for 300,000 people — and by ending a state preschool program and cutting funding from K-12 education.
“We can’t spend what we don’t have,” Bob Burns, then the president of the Arizona State Senate, said at the time. “The choices were education and health care, because to even get us close to being balanced, we had to go where the money was, and the money is in education and health care.”
But when revenues increased…
But state income and sales taxes, which were quick to decline during the recession, have also improved relatively quickly in the recovery. According to the Census Bureau, state revenues were beginning to improve by the middle of 2010 and continued to rise last year. Rising revenues have meant that at least 25 states, including Kansas, are projected to finish their current fiscal year (ending in June) with a budget surplus, according to the National Conference of State Legislatures.
Now that states do have a choice about their spending priorities, the question in state legislatures around the country has been, “What to do with the surplus?”