The Real Question is Why Real Per-Student Spending Hasn’t Risen Faster

What EVERYONE Should Know about K-12 Spending in NC

In this budget season as in any other, there’s a lot of fear, uncertainty, and doubt swirling around about K-12 spending. Civitas Institute, a conservative think tank specializing in North Carolina state politics, offers a case in point:

This needs to be discussed on two levels. Let’s start with the technical and leave the rhetorical for the end.

Misplaced Surprise

Civitas is angry that people keep comparing current per-student funding to pre-recession levels. Quoting from the article:

• Education establishment apologists use pre-recession highs for comparisons to claim K-12 is underfunded
• But they purposefully ignore long-term trends in order to mislead
• Even after adjusting for inflation, per pupil spending nearly doubled in the 25 years leading up to the 2008–09 recession

We’ll start by reproducing the Civitas piece’s central graph, with a few more years on the ends.

I found the rest of their chart. Current funding levels roughly same as 1998. Data source: NC DPI Statistical Profile, archives and current, adjusted by BLS CPI.

The argument under the chart in the article is a remix of one the John Locke Foundation has trotted out a couple of times, which is clever but not especially insightful: real incomes go up and up, but taxes mostly stay within a narrow politically tenable range, so therefore real government spending has been going up and up all this time for some doubtlessly liberty-destroying reason. The horror.

The way that argument is applied to school funding in the article is summarized in this quote:

Naturally, spending fluctuated along with the economy’s growth and recessions. But the overall trend is indisputable: the “pre-recession level” of 2008 — 09 marked a decades-long unsustainable run-up of K-12 education spending.

There are two distinct phases in that graph. One extends back past its beginning and ends around 1989–1990. From 1980 to 1990 real NC K-12 per-student expenditures increased by 73% (about 5.6% per year). From 1990 to 2009 such expenditures increased by a mere 21%, or 1% per year. But yes, steadily increasing up to 2009.

However, there are a couple of fairly intuitive reasons why it shouldn’t be surprising that 2008 — 2009 (or any given day in the last forty years, really) was an all-time high:

  • Real income per capita sets a new high nearly every year.
  • K-12 students per capita has set a new low nearly every year since at least 1980.
Data Source: FRED for NC Income per Capita, BLS for CPI, and NCDPI (past and present) for enrollment

Real per-student spending basically equals:

(income_per_capita / students_per_capita) * policy

…so both of these provide huge tailwinds for it. Together they mean that even adjusting for inflation, any given level of funding is generally easier to sustain in the following year than it had been in the first place.

Data Source: FRED for NC Income per Capita and NC population, BLS for CPI, and NCDPI (past and present) for enrollment

Conversely, we can divide expenditures per student by income per student to isolate the policy term. (“Policy” here means the revenue function on income — comprehensive effective tax rate — times K-12’s share of spending.)

Data source: NCDPI (past and present) for expenditures, FRED for NC Aggregate Income, BLS for CPI

For all the expense growth noted as we began, as a share of aggregate income K-12 spending in North Carolina has been headed downward since 1980. That is literally the opposite of “unsustainable.”

Keeping Funding Constant Isn’t Even Necessarily the Goal

…It’s more like the least we can do. Civitas doesn’t buy that, however. They have other thoughts:

The education establishment’s narrative that the state is “underfunding” K-12 education is a power grab and a myth. The data presented in this article exposes the latest misleading tactic they are using to lobby for more taxpayer dollars, and thus more control.

Put a pin in “power grab” talk for a sec. We’ll come back to that. For now let’s go over what it means for K-12 spending per student to remain constant on an inflation-adjusted basis:

  • Constant staffing levels at best. Most staffing levels are already set per-student, so if we’re keeping real per-student spending constant there’s no way to (say) improve class size without cutting real pay or by cutting staffing elsewhere, such as TAs, support staff, or administration, to make room for more teachers.
  • Real salaries+benefits fixed year to year: no raises greater than inflation, Salary or personnel cuts required if benefits costs rise faster than inflation, as they have regularly for decades. Pay cuts can take the form of direct salary cuts, soft salary cuts (raises less than inflation), or by chasing out expensive experienced teachers and using attrition to change the mix to less-experienced (and therefore cheaper) ones.
  • No room for further outreach. According to an EPI study, 40% of the increase in education costs nationally from 1967–1996 went to special education programs. A comparison of NC DPI budgets 2003–2004, 2008–2009, and 2016–2017 confirms this trend has continued to the present, if not accelerated.[1] If that program — or any program — is forced to grow faster than inflation, it comes at the expense of some other program.

This is not just a hypothetical scenario. The ‘03–04 DPI budget came in 2% or so lower than ’16–17 budget in real state per-student spending. It is easy to see, however, that they are not the same budget.

Source data: NC DPI budget highlights 2003–2004, 2008–2009, and 2016–2017

Obvious artificially forced tradeoffs abound. Transportation costs rising faster than inflation? Teaching assistants get the axe. Cost of benefits outpacing inflation? Teaching allotments and salaries both cut. Special education and ESL programs are up? Cuts to textbooks and administration make up the difference. General assembly wants new programs? They’ll have to cut longevity pay (personnel svcs above) and classroom materials to make those shiny new programs fit. Want a K-3 class size mandate? Specials teachers go on the chopping block. Those trades were not made explicitly in those terms, but they’re the natural effect of trying to maintain a given past per-student funding level.

Remember those soft salary cuts? 100% in evidence here. This WRAL report from 2016 tells much of the story of those years (and remains relevant):

When adjusted for inflation, North Carolina’s average teacher salary has dropped more than 13 percent since 1999
. . .
When North Carolina’s average teacher pay went down in previous years, it wasn’t because teachers were paid less. The population just became less experienced.

These sorts of forced tradeoffs are strong signals that public schools do indeed remain underfunded, at least in the sense that there is apparently not enough money to sustain quite long-ago levels of service. In this light the schools’ “power grab” amounts to hiring more teachers and teaching assistants, keeping their pay up with inflation, and providing them with the textbooks and other supplies and equipment they need to do their jobs. Nefarious!

Forcing those tradeoffs is absolutely a deliberate choice, an act of political will; it is not forced upon us by circumstance. 2009’s ̶p̶o̶w̶e̶r̶ ̶g̶r̶a̶b̶ record per-student funding levels represented a smaller percentage of North Carolinians’ treasure than had been required to maintain 1980’s much lower real funding level. Even if we returned to 2009’s funding level, that percentage would be lower still today.

Obviously that is not the end of any argument. The state has new burdens that it did not have in 1970 or 1980. Healthcare costs supply pressure on inflation-adjusted funding across government, from employee benefits to Medicaid. It is possible for school funding to get crowded out by other mandates, even in the context of rising wealth and falling birth rates. But if that’s the case, let’s point the discourse at those tradeoffs and have a good-faith discussion about what’s best for society.

Let’s not continue to use nominal funding figures to suggest that real funding levels haven’t been persistently lowered when they clearly and demonstrably have.

Let’s not pretend that everything is fine and fully funded in the name of lowering taxes, then smear educators when lower revenues cause funding pressure.

Let’s not try to suggest the only reason for real funding levels to increase is political “power play” after years of deliberately sacrificing classroom-directed appropriations to achieve that persistently lowered overall funding level.

We can do better.

Intellectual Honesty…Is Hardly Ever Heeeeeeaaaaaaard but Mostly What I Need from Yoooooouuuuu

We also need to talk about the rhetorical angle on this Civitas piece. It may be bad writing to mix metaphors, but it’s astonishing to be accused of disingenuousness by someone who on multiple levels is pointedly ignoring the, ahem, elephant in the room even as it urinates on everyone’s heads, singing loudly that it’s raining.

Does anyone else find it somewhat intellectually dishonest and misleading that none of these analyses using “pre-recession levels” of funding say word one about the spending trends that preceded that high-water mark of spending?

Civitas is presumably aware that the April/May public relations battle over HB13 (the sadly neutered fix for the unfunded K-3 class size mandate) brought a renewed onslaught of NCGA Republicans nauseatingly using nominal, unadjusted appropriations and/or spending data to trumpet their ostensible education bona fides. The more recent push for the 2018–2019 budget has redoubled this. Here are some highlights: Chris Malone, Chris Malone again, Chad Barefoot, Chad Barefoot again, Speaker Tim Moore, and NC Senate Majority Leader Phil Berger.

On a personal note, back in April I spent more than 30 minutes patiently explaining to one of Senator Barefoot’s aides on the telephone why the K-3 class size mandate was not truly funded because the nominal increases to appropriations had not been sufficient to cover inflation and enrollment increases. I rather doubt I was the only person who did this. Later, I received the following conveniently color-coded chart in an official email (the Constant Contact link above) from Senator Barefoot’s office. He also tweeted it (Twitter link above), and Representative Malone posted it on Facebook (second FB link above).

Also in an email from Sen. Barefoot’s office. Not from his campaign, from his office, even as the color-coding makes it basically party propaganda.

I do not think there is anything at all disingenuous in that context about insisting that most of that chart actually looks like this:

Data source: NC DPI Statistical Profile, archives and current, adjusted using BLS CPI (xls). See note [2] below for context.

The budget figures for 2017–2018, by the way, look to remain more than 6% below 2008–2009, which combined with lower federal funding levels means that the next school year will remain lower on that graph than any point in the blue section.

It has been especially common for folks selling nominal state appropriations in this way to use 2008–2009 as their starting point, presumably to avoid showing any increases in funding from a Democratic majority. To suggest that this kind of direct response to a standing and oft-repeated claim constitutes a deliberate omission of context is a peculiar argument.

It takes some gall to use your taxpayer-subsidized place in the discourse to weigh in on this issue to point the word “disingenuous” solely at the people straightforwardly adjusting raw numbers for better context instead of the ones who, knowing better, toss out the nominal figures with a wink. Possibly those who go even further and refer to inflation-adjusted per-student funding as “myth,” “cries from critics,” “at odds with the facts,” etc. might seem especially worthy of condemnation.

On the other hand, this has been going on for a while. So I’m honestly grateful we’re past that now, and we’ve all realized the importance of adjusting these numbers for inflation and enrollment for sober analysis. I hope the news was broken gently to other analysts at Civitas. If you could possibly help bring NCGA Republicans on board, it would do a lot for the discourse on this important issue.


NOTES

  1. In many ways the story of the big run-up in public ed costs from the late 60’s to the early 90’s is the story of special education, particularly the IDEA and its precursors. These mandates were supposed to be additive, to assert and protect the rights of children who had not been well served. It was not supposed to be a competition with the rest of the system for support, a notion easier to understand when we remember that “No Child Left Behind” seemed like a good slogan for conservatives not that long ago. [BACK]
  2. Adding federal funding to that graph is worthwhile for two major reasons. One, it allows inclusion of stimulus funding that passed through to schools. Two, federal funding is partially a function of state funding levels through the FIGS portion of federal Title I funding. [BACK]
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