Analyzing Education Spending

January 27th, 2014 by 10 Comments

Education funding has taken center stage in Georgia political discussions. What do the numbers show?

It is clear there are many Georgia school systems in difficult financial shape due to a combination of state spending reductions, declining property tax values and inadequacy of the state’s education funding formula, which was created in 1985 and may be replaced next year. Critics note the billions of dollars of state “austerity cuts” that have occured since 2003. This is the difference between the funding level determined by the state’s funding formula and the amount actually funded. In order to put this in context it is important to look at the actual numbers over time and to compare Georgia’s education funding to other states.

The state’s share of funding has declined: Over the last decade, the share of state funding declined from 54 to 51% while the share of local funding increased from 40 to 41 percent and the share of federal funding increased from 7 to 8 percent (with large increases in 2010 and 2011).

State education funding as a percentage of total state spending has remained steady. Although the recession reduced total state revenues dramatically after 2008, K-12 education’s share of the budget was the same (38 percent) in 2003 as it was in 2013, and was fairly consistent in the interim years. (In 2002, before the austerity cuts began, K-12’s share of the budget was 37 percent.)

State education funding was prioritized over other areas of state spending. The table below compares education spending growth to other areas of the budget. (This table combines K-12 and Pre-K spending.) Education spending increased in absolute dollar terms by 27 percent, second only to health care spending, which includes mandatory spending on Medicaid. (Inflation during the period was also up 27 percent.)

As a share of the budget, health care increased its share over the decade by nearly 8 percent (health care now takes one out of every five state dollars) and education increased its share by nearly 1 percent, with every other category declining. State budget writers have said repeatedly that they have attempted to protect education from spending cuts as much as possible, and this shows that relative to non-health care spending this has been the case.

           Spending Growth FY 2003 to FY 2013
$ Growth Share of Budget Change in Share of Budget
PK-12 Education 27% 40.4% 0.8%
University System 4% 9.2% -1.8%
Technical College System 14% 1.7% -0.2%
Health Care 103% 20.5% 7.9%
Debt Service 2% 4.8% -1.1%
Everything Else 1% 23.5% -5.7%

How does Georgia’s education funding compare to other states?

Georgia allocates a higher percentage of its state budget to education than most states. Georgia’s K-12 state spending as a percentage of total state spending was the tenth highest in the nation in FY 2013. Source: National Assocaition of State Budget Officers, Table 8, page 17.*

Georgia’s total education spending per pupil (including local funds) exceeds all of its neighboring states, but ranks 35th nationally.

Per Pupil Current Spending (FY 2011)
Georgia $9,259
Florida $9,030
South Carolina $8,903
Alabama $8,726
Tennessee $8,484
North Carolina $8,267

Source: National Center for Education Statistics, Digest of Education Statistics 2013 Tables (latest data available), table also includes inflation-adjusted data back to FY 1970. Estimates for FY 2012 (NEA Rankings and Estimates 2013, page 55, Table H-11 ) show similar results.

Georgia’s total education funding ranks in the top ten when measured as a percentage of personal income. Economists prefer to compare state spending as a percentage of personal income rather than per capita amounts to better adjust for cost of living differences. So in addition to allocating a higher percentage of its state budget to education than all but two states, Georgia also allocates a higher percentage of its citizens’ income to education than all but nine states.

According to the Census Bureau (pages 11 and 12) in FY 2011:

  • Georgia’s total and state per pupil education revenues ranked 37th highest. Per pupil spending ranked 35th, while instructional spending ranked 30th.
  • As a percentage of personal income, Georgia’s total education revenues ranked 10th highest, state revenues ranked 26th, total spending ranked 12th and instructional spending ranked 8th.
  • The Census data also shows that Georgia’s total education spending ranks higher than all of its neighboring states. If Georgia were to spend the same amount per pupil as North Carolina, for example, it would reduce spending by more than $1.5 billion ($992 less per pupil multiplied times Georgia’s 1.6 million students).

The chart below shows the last decade of education funding. This table only includes funds received by local school systems, not the funds used to run the State Department of Education. The amounts do not include capital spending, nutrition or Pre-K. The data can be found here by clicking on the “revenue” button. At the far right are two additional columns. The column labeled “State Appropriations” is the total of all state funds (education, health care, corrections, etc.) and the second column — labeled “Ed %” — equals the state education funds in column six (“State $”) divided by the total state appropriations in column 14. (FTE stands for Full Time Equivalent and is a way of measuring the number of students.) All of the years are shown because it is easy to get different results based on the years you choose to compare.

Fiscal Year FTE Local $ Local Per FTE % State $ State Per FTE % Federal $ Federal Per FTE % Total $ Total Per FTE State Appropriations Ed %
2003 1,471,333 $4,295,165,553 $2,919 40% $5,825,401,669 $3,959 54% $708,957,538 $482 7% $10,829,524,760 $7,360 $15,216,467,836 38%
2004 1,498,580 $4,593,260,220 $3,065 41% $5,695,312,766 $3,800 51% $821,903,050 $548 7% $11,110,476,036 $7,414
$16,068,266,666
35%
2005 1,528,133 $4,834,565,349 $3,164 41% $5,890,066,550 $3,854 50% $961,761,037 $629 8% $11,686,392,936 $7,648
$16,442,572,112
36%
2006 1,566,284 $5,225,563,917 $3,336 41% $6,400,512,865 $4,086 51% $1,021,485,591 $652 8% $12,647,562,373 $8,075
$17,273,350,869
37%
2007 1,607,894 $5,796,543,928 $3,605 41% $7,230,496,102 $4,497 52% $1,010,299,112 $628 7% $14,037,339,142 $8,730
$18,566,583,607
39%
2008 1,627,660 $6,157,972,027 $3,783 41% $7,729,847,682 $4,749 52% $957,774,751 $588 6% $14,845,594,461 $9,121
$19,708,307,978
39%
2009 1,630,541 $6,326,056,922 $3,880 44% $7,044,061,283 $4,320 49% $1,117,640,069 $685 8% $14,487,758,273 $8,885 $18,742,222,509 38%
2010 1,635,993 $6,246,499,844 $3,818 43% $6,268,562,785 $3,832 43% $2,025,128,533 $1,238 14% $14,540,191,162 $8,888 $16,605,229,712 38%
2011 1,641,114 $6,048,714,740 $3,686 41% $7,040,615,848 $4,290 48% $1,679,948,832 $1,024 11% $14,769,279,420 $9,000 $17,746,058,803 40%
2012 1,656,992 $5,868,540,070 $3,542 42% $6,957,101,966 $4,199 49% $1,236,063,473 $746 9% $14,061,705,508 $8,486 $18,213,617,686 38%
2013 1,679,589 $5,773,710,521 $3,438 41% $7,243,264,908 $4,313 51% $1,159,345,984 $690 8% $14,176,321,413 $8,440 $18,997,225,844 38%

Note: A typo regarding Georgia’s ranking has been corrected.

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