Tag Archives: state funding

The Problem With Building Programs on Sin Taxes

There’s good news and bad news in Arizona right now. The good news: The smoking rates in Arizona are going down. The bad news: Lower smoking rates mean less pre-k funding. $26 million less, in fact.

That’s because Arizona funds pre-k with a tobacco tax. In 2006, Arizona voters passed Proposition 203, which added a 4-cent tax per cigarette to fund the state’s pre-k program and created a statewide office, First Things First, to oversee the program.

Using tobacco taxes – and other sin taxes – to fund initiatives is a politically popular approach. Set aside for a minute that sin taxes are inherently regressive (e.g., the people footing tobacco taxes generally have lower income and education levels). In Arizona’s case, a tobacco tax feels like a win-win: the state introduces an economic incentive to reduce cigarette consumption and funds early education without going through the vagaries of appropriation.

But Arizona’s experience also shows it’s not a long-term solution to funding early childhood education. The smoking rate in Arizona has decreased over the past several years and, with it, funding for pre-k. In FY09, the state’s tobacco tax pulled in $141 million; the estimate for FY14 is $115 million. First Things First stockpiled money in the first few years because it started collecting taxes before it was required to disburse funding, so right now there’s a cushion. But as less tobacco tax money is coming in, dipping deeper into the fund will be necessary.

Which brings us to the problem with building a program on sin taxes: sometimes incentives work. Tobacco taxes are not a sustainable substitute for state fiscal commitment in early education.

To account for the loss in state funding, First Things First is changing their allocation structure. Right now, pre-k funding flows from First Things First to regional councils to pre-k providers. The regional councils, entirely run by volunteer community members, decide which providers get funding. If selected, a provider typically receives a number of state-funded pre-k slots that correlates with the size and quality of their program.

Starting next July, however, those volunteer-led regional councils will determine both which providers get slots and how many slots they should receive. First Things First will fulfill those requests if they can, funding the highest quality providers first, but there’s no guarantee that providers will receive any funding at all. The short-term consequence is uncertainty; the long-term consequence is fewer students being served.

Arizona isn’t the only state with issues funding pre-k through a sin tax. California is facing decreasing tobacco tax dollars, North Carolina and Georgia have had trouble with inconsistent or insufficient lottery revenue, and Arkansas’ beer tax was all over the place for the few years it existed. (President Obama’s Preschool for All initiative is supposed to be funded through a tobacco tax, but smoking trends nationally are also going down.)

Funding state pre-k through a tobacco tax is politically palatable and a fine place to start looking for funding. But if we’re serious about our commitment to early education, we can’t take the shortsighted, easy win — we need to prepare for the eventuality that the money won’t last forever.

Rural Reform Matters, ROCI Is Different

For more than a year now, a group of top-flight researchers have come together (with the generous support of the J.A. and Kathryn Albertson Foundation and under the leadership of Dr. Paul Hill) to apply fresh eyes and introduce new voices to the study of rural K-12 education. Over the next several months, this “ROCI” task force, with the support of Bellwether, will release its first round of papers and, hopefully, grow our field’s understanding of the strengths, needs, and complexities of rural schooling.

This first of these publications, “Breaking New Ground in Rural Education,” is Hill’s introduction to the effort. Those new to rural K-12 will learn a good bit, those knowledgeable about the field will understand how ROCI differs from previous efforts, and K-12 stakeholders (including policymakers, researchers, and philanthropists) will see why rural education merits more consideration.

On that last score, the number of rural students alone demands attention. As Hill notes, more than 5.5 million kids attend remote-rural or small-town schools. That’s more than the enrollment of the 20 largest urban school districts combined. In half of the states, rural kids make up more than 25 percent of student enrollment.

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School Funding Reform, Hard Work and Fraught with Potential

People love to argue about how much funding schools get, whether it’s too much or too little or whether schools should be run like businesses. Most people, though, don’t focus on the details—the complicated state formulas that allocate the majority of the nearly $650 billion spent annually to fund public schools across the country. Legislators, on the other hand, must care about the details. Those formulas are the primary mechanism for enacting big changes in school funding and school policy. But conflicting values and political interests create stagnation where there should be energy.  Texas, the most recent state waging a school finance battle in the courts, will likely face another protracted school finance debate in the (hopefully) not too distant future (see my related post here), provides a showcase for the challenges of school finance policy and its potential as a launch pad for other education policy reforms.

Texas is illustrative because it highlights the tension between demands of local representation and the ideological realities of statewide politics. All legislators represent school districts, and all school districts want increased funding. As a result, legislators are loath to go home with less money for local schools. However, for meaningful change to be made in a system that already garners 40 percent of state spending in Texas (and similar levels in most other states), the numbers get very large very fast.

The result is a kind of cognitive dissonance in a conservative political environment between the need to deliver the goods to constituent districts and abhorrence to big government spending. This battle between parochialism and ideology (waged within many legislators’ minds as well as among legislators) creates a nearly intractable policy environment for meaningful school finance policy. Continue reading

Why the “Landmark” Texas School Finance Ruling is Irrelevant (And Why It Shouldn’t Be)

In August, a Texas court declared the state’s school finance system unconstitutional, and a month later Governor-elect and current Attorney General Greg Abbott filed the state’s appeal of the ruling. The words Texas, school finance, and court were enough make this national news. The ruling responded to a suit filed by a group of school districts, charter schools, parents, and others charging that Texas neither spends enough money on its public schools, nor does it spend it correctly. It’s not the first such case; the most recent was in 2005. Nor will it be the last. But while the current ruling reflects important and distressing facts about the condition of education in Texas, the reality of the legal process means that any action to address the problems will be a long time coming. In Texas, and many other states, litigation is ultimately an ineffective way to change education policy – something that should sober those hoping Vergara-style suits usher in an era of change.

The legislature will convene for its regular session in a couple of months, but if history is any guide, the district court ruling in the finance case will be ignored by those with the actual power to change the system. Instead, the legislature will wait to act for a year or more, allowing the appeals process to run its course. The wait and see approach is justified partly by the fact that the Texas Supreme Court overturned a significant portion of a 2005 school finance ruling by the same district judge. So, rather than acting immediately on a district court ruling with a $5 billion annual price tag, the legislature will pin its hopes on the markedly more conservative Texas Supreme Court for a possible reversal or at least a less costly set of marching orders.

One challenge to urgency in addressing a system that already spends the lions’ share of the state’s money is prevailing rhetoric that money is not the answer. Strong voices in Texas’ fiscally conservative policy landscape argue that increases in public education spending haven’t yielded desired results—so clearly the answer is not more money. Correcting the course of public education in Texas cannot be solely a function of funding. But, since the Texas Supreme Court asserted in 2005 that school funding was “drifting” towards inadequacy, student achievement has lagged in the face of tougher standards. And in real dollars, funding looks pretty flat.

Some highlights (lowlights) from the court’s findings on student achievement include: Continue reading