Education trust fund revenues are up over eight percent
Published 12:00 am Tuesday, August 31, 2004
Commentary by Gary Palmer
After dire predictions of catastrophic revenue shortfalls in the state’s education funding for the year, revenues for the Education Trust Fund are up by over eight percent this year and the fund will most likely end the fiscal year with a surplus.
Yet there are those who say that we are still not spending enough.
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Before we engage in a debate over how much we should be spending on education, I think we have to take a serious look at how much funding has increased for education over the years and what the taxpayers have received for their money.
In 1970,Alabamawas spending $226 million (that is, $1 billion adjusted for inflation to 2001 dollars) on elementary and high school education.
By 2001, the state had increased education spending to $2.6 billion per year.
In thirty years education funding has increased over 147 percent, and appropriations per student went up by over 209 percent (percentages adjusted for inflation). It should be noted that in 1970 there were 1,559 public schools with over 850,000 students; by 2001 there were 114 fewer schools and a whopping decline of over 119,000 students.
Despite the decline in schools and a 14 percent decline in enrollment, administration personnel has grown.
Since 1970 there has been almost a 40 percent increase in the number of teachers, over 50 percent increase in superintendents and assistant superintendents, over 42 percent increase in principals and assistant principals, and supervisors, and an underdetermined increase in other administrative personnel.
Obviously, we have had a substantial increase in education funding inAlabama.
And next fiscal year, for the first time, the state budget for K-12 education will top $3 billion. So what have we gotten for the taxpayers’ money over the last 34 years and what should we expect will be the return on the $3 billion investment in education that will be made in the next fiscal year?
The simple answer to both questions is “not enough.”
A recent report by the Alabama Policy Institute (API) found that one of every three high school graduates fromAlabama’s public school system does not possess basic reading, writing and math skills, costing the taxpayers and businesses in this state millions of dollars each year.
According to API’s report, two-year and four-year colleges and universities are spending at least $85 million on remedial education for students who have to take high-school level courses for no credit just to be ready to take college-level courses.
Keep in mind that the taxpayers subsidize the students’ tuition; in fact, the taxpayers pay two-thirds of it.
API’s report on remedial education also estimates that under-educated high school graduates are costing businesses inAlabamaover $450 million a year as a result of retraining, lost productivity, etc.
Alabamais not alone in the poor education of its graduating seniors.
When this same study on remedial education was done inMichigan, it was found that the combined costs of having under-educated graduates enteringMichigan’s colleges and universities and businesses were over $600 million per year.
Part of the reason our students are unprepared for college and the work force is that too many students are not learning to read in the first grade and too many are leaving elementary school without a good foundation in mathematics.
Another problem is that our high school graduation exam does not really test knowledge at a high school level.
Much of the test, in fact, is on material that is at the 8th and 9th grade levels.
Again,Alabamais not the only state with this problem.
Achieve, Inc., an education research group founded by a group of former governors and education experts, released a report last May that found that high school exit exams are too weak in most states.
Obviously, we have some work to do and many will say that we need another billion dollars for education to solve this pressing problem.
Before jumping on that bandwagon, let’s look at what are doing with the money that we already have.
Let’s start with PEEHIP, the Public Education Employees Health Insurance Program.
PEEHIP is going to cost the state over $600 million this year and the cost is growing rapidly.
An audit by Price Waterhouse last January found that the state’s unfunded liability for PEEHIP is $7.8 billion dollars.
This is billion with a capital “B.”
They also found that the state employees’ health insurance program, which is separate from the public education employees plan, has an unfunded liability of $3.1 billion.
Together, these insurance programs are creating a $10.9 billion unfunded liability for the state that Price Waterhouse says is growing at a billion dollars per year.
This liability could be reduced significantly to a manageable level by raising the presently low retirement age of education and state employees and by increasing the amount these employees pay for insurance if they retire early.
The state could also save millions more by allowing schools to privatize non-academic services such as school bus transportation, lunch room services, and janitorial and maintenance services. The Alabama Policy Institute did a study on the benefits of privatizing these services and estimated that the schools would save another $60 to $80 million per year that could be put into the classrooms.
Clearly, if the state continues to waste its financial resources, the taxpayers as always will bear the brunt as our taxes are either squandered or raised.
We should all be asking the critical questions not just about how much we spend, but what we are spending it on and what we are getting for our money?
Gary Palmer is president of the Alabama Policy Institute, a non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.