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2nd Annual School Spending Report:

Prepare for Tough Times Ahead

"Where's the best place to spend our money-Pre-K programs? Bonuses for teacher recruitment?" As of last spring, most state policy makers who consulted Mike Griffith, a policy analyst at the Education Commission of the States, had questions like these.

Today, he senses urgency and despair in their voices as they ask, "What are alternative sources of revenue? How do we avoid layoffs? What can we do to get through this?"

With districts relying on states for close to 50 percent of total education funding, these questions reflect a very real problem. "Oddly enough," says Griffith, "the most difficult thing is [that] we've had so many good years in a row. It's going to be hard now for school districts to adjust their budgets."

Ah, the good ol' days. During the past five years, funding availability grew tremendously, and states and districts could get away with not balancing their budgets. Between 1996 and 2001, Griffith says, per-student spending increased by $1,741, or 30 percent (which is $773 per student over inflation). He also notes increases in categorical spending-which includes teacher recruitment, special education, professional development and other program areas. Some of this was due to states that were ordered by the courts to increase spending in areas such as facilities.

At the same time, education became a huge priority for governors and others in the public eye. "We're talking about this stuff in a way we've never talked about it before," says Donald Tetreault, an assistant professor in the College of Education at the University of South Carolina, who teaches courses in school finance and policy analysis. "It has emerged on the policy radar." Funding issues at the forefront are:

Equity of funding systems. If states cut education funds, they're careful to try to avoid touching the per-student spending, or formula, funds because they are skewed to help low-income districts, says Griffith.

Level of adequacy. While each state's definition varies, adequacy is usually related to testing-a certain level that a percentage of students in the state should achieve. When states do adequacy studies, Griffith says, they typically find that they're not providing enough funding to meet the goals. Tetreault adds that legislators who stress a need to fund education adequately are also working toward tax relief. "You can't have it both ways," he says. "Good schools cost money."

Relationship between funding and achievementlevels. During the past 10 years, states have been working to define expectations for their students-and to link results to funding availability.


Education is certainly a high priority today, but the fiscal outlook is bleak. In late October, the National Conference of State Legislatures released a study that shows just how dramatically conditions have taken a downturn. Forty-four states reported that revenues for fiscal year 2002 were below forecasted levels. Nineteen states say that spending is currently exceeding budgeted levels. And at least 28 states have implemented or are considering budget cuts. As tough as it is to digest these numbers, the economic impacts of Sept. 11 aren't even reflected in the study.

Governors and legislators are expected to exempt certain programs from cuts when possible, and K-12 education is the area most likely to be spared, according to the study. Still, some states won't be able to do that. In Michigan, for example, revenue declines from various tax sources could cause a 2.9 percent ($336 million) reduction in the school fund. Currently, lawmakers there are negotiating a plan to use the state's "rainy day fund" to preserve the education budget.

Other states are shelving school reform programs for now. Iowa planned to give teacher bonuses this year as rewards for accreditation and improved student results, for example, but Griffith says that programs like these are being delayed or abandoned altogether.


Here's what experts say districts can do to stay afloat during a funding crunch:

Cut wisely. If decisions must be made about program cuts, think about what would make the least impact on your community. Griffith anticipates that maintenance will be cut first, and districts can implement a hiring freeze. "Schools will try to cut everything first before laying off teachers," he says. "But teacher salaries are by far the largest single line item."

Find alternate sources of funding. Maybe parent contributions can help with band expenses or you can charge a fee for certain extracurricular activities. Fundraising can help in this area. In the past decade, Tetreault says that many districts and schools have established their own fundraising foundations-doing everything from signing fairly lucrative contracts with soft drink vendors to renting school property. An elementary school in Brooklawn, N.J., recently earned $100,000 for naming its gym the ShopRite of Brooklawn Gymnasium.

Find areas to split costs with another district. Examples are transportation, Advanced Placement courses, special education and vocational education. And if a current law doesn't allow your district to work with neighboring ones, demonstrate how money could be saved and advocate for change.

Lobby for existing state funds. This can be done through teachers unions and professional organizations such as the American Association of School Administrators, the National Association for Elementary School Principals and the National (and state) School Boards Association. But don't count on getting what you need. "The handwriting is on the wall," Tetreault says. "Even if schools make an argument that they need more money, they're probably not going to get more money." Meanwhile, Griffith says that some states are taking these actions:

Increasing cigarette and alcohol taxes. "Consumption goes up during bad times and there's less of a public backlash," he says.

Establishing lotteries with profits going directly to education.

Selling a special license plate declaring support for education.

Looking at ways districts can work together to save costs.


Just how bad will times get? "If we can come out of [this recession] pretty quickly, the public might not notice [education cuts]," says Griffith. But if it lasts beyond this year, he says, cuts may be significant and obvious.

What's especially difficult is that some areas, such as technology, professional development and classroom supply expenses, never had enough funding to begin with, even pre-recession. Tetreault says that many districts are still realizing that technology purchases go beyond buying computers. "It's not just the computer or the hard drive but the training and support that costs a lot of money," he says.

Tetreault also sees a broader problem. "School funding problems are political problems that are solved with political solutions," instead of research-based solutions, he says. There's no consensus on what the best solutions are. But at least people are talking.

Sources: School Spending Report statistics compiled from Quality Education Data, Market Data Retrieval, the National Center for Education Statistics and the National School Supply and Equipment Association.

Teachers Empty Pockets for Classrooms

"The Scrooge who controls [the supply closet] always crosses out what we need and sends us less. ... One year I ordered 24 pencils and and erasers, one for each student. ... He actually crossed out 24 and wrote 12!! Did he really expect my students to share a pencil and eraser?"

"Last year, I spent $2,000 out of my own pocket ... It frustrates me to no end. I am responsible for teaching my kids but do not always have what I need to do the job. ... I would like to be given ... the same trust, respect and courtesy afforded any professional."

These quotes from a Teachers.Net survey on classroom supplies are anonymous (hence their honesty), but they could have come from teachers in Any District, U.S.A. According to a teacher study conducted for the National School Supply & Equipment Association, 75 percent of respondents reported spending some of their own money on school supplies. In 2000-2001, Pre-K and kindergarten teachers spent the most by grade level, $1,794 per year, and teachers in the Northeast spent the most by region, $1,686. The average teacher reported spending $589.

Some states offer funding for out-of-pocket classroom supply expenses. South Carolina's State Department of Education, for example, allots $200 to each teacher per year. Implementing such a plan, however, can be tricky. In 2000-2001, the first year South Carolina offered the reimbursement, at least $63,000 in unused funds were returned to the state, according to Sue Brigman, a State Department of Education fiscal analyst. This was partly because not all districts informed teachers of the need to retain receipts, she says.

Meanwhile, teacher expenses have gotten attention from Congress, as well. Both the House of Representatives and the Senate have introduced legislation for teacher tax credits for expenses not reimbursed by schools. While the Senate-passed $1,000 tax credit didn't make it into the final tax relief bill passed by the House, the issue had a lot of support and won't likely be forgotten.

Legislation aside, here are some other efforts helping to ease the burden on teachers' wallets:

Adopt-A-Classroom. This national nonprofit foundation was founded by Jamie Rosenberg, a Miami attorney whose idea evolved from the Adopt-A-Highway programs. "My vision is that one day every classroom in America will be adopted," he says. Corporate and individual donors can direct a $500 contribution to a specific classroom.

Free stores for teachers. At Schoolhouse Supplies in Portland, Ore., the merchandise is free. Teachers in 56 of the district's 98 schools can shop anytime, and those from less needy schools may stop by when surplus items are available. Local businesses donate books, paper and other classroom supplies, and volunteers help staff the store (teacher volunteers can earn a shopping trip). As of mid-November 2001, 2,220 shoppers had been through the store, "buying" products worth a total of $860,000. Director Gina Purcell says at least two other such stores exist, in Orlando, Fla., and Cincinnati, Ohio.

Auctions for cheaper supplies. offers an online auction that provides economical alternatives to storebought classroom materials. It's also a way for teachers-especially those with overcrowded classrooms and those who are retiring-to recycle supplies that might otherwise remain in a closet.

School supply company donations. One example is the online store, which donates 15 percent of purchase prices to teachers. Each customer who orders educational software from the site is asked to select a "teacher of choice" from the list of registered teachers, and that teacher receives a rebate check.

Informal arrangements with local companies. One respondent to the Teachers.Net survey asks her sister to bring home unused supplies from her employer. "It is amazing what they throw away! They sent our school 500 reams of paper, because the company logo changed and they were going to toss [it]," she says.

STATE BY STATE COMPARISON As in last year's report, New Jersey comes out on top for per-student spending, although the amount was $9,963 in 2000-2001 compared to $10,153 from 1999-2000. In all, nine states spent $8,000 and up per student. Utah, at $3,991, spent the least per student both years. Maine, Nebraska, South Dakota and Wyoming have the best classroom coverage, at approximately 10 students per teacher.

Note: All district and school counts reflect current school year. All dollar figures are from 2000-2001 school year, except for textbook expenditures and other instructional expenditures, which reflect money spent in 1999-2000, the latest year available. Sources: QED, NCES, MDR

A Decade of District Technology Spending

During the last 11 years, the school technology market has shown steady increases. (The spending spikes in the 1998-1999 school year are probably due to increased spending to prepare for Y2K and the start of the Federal E-Rate program.) While spending appears to be relatively flat for the 2001-2002 school year, the figures don't take into consideration the innovative ways that districts are finding to fund technology purchases. For example, many are seeking extended-payment contracts with vendors and one-time grants from government agencies to improve technology infrastructure and student-to-computer ratios.

International Comparison of Expenditures

U.S. education expenditures ranked high compared with other countries. For secondary education, Austria and Switzerland were the only countries in the 29-member Organization for Economic Co-operation and Development that spent more than the U.S. Those two countries, plus Denmark and Norway, spent more than the U.S. for primary education. Mexico spent the lowest of the OECD countries for both primary and secondary education.

Source: NCES Note: Figures are in equivalent U.S. dollars as a percentage of gross domestic product per capita.