1. On the edge: Are states and school districts facing a funding cliff? Annual Meeting of the Education Writers Association Intercontinental Hotel, New Orleans, LA April 8, 2011 Donald J. Boyd Senior Fellow boydd@rockinst.org

2. 2 Rockefeller Institute of Government Yes

3. 3 Rockefeller Institute of Government Revenue Crisis Easing But Fiscal Crisis Continues 1.States are so far down it will be a long slow way back 2.Crisis hits school districts with a lag 3.Longer-term pressures loom after the cycle is behind us

4. 4 Rockefeller Institute of Government It’s a long way back State tax revenue has grown for 4 quarters But inflation-adjusted revenue is 9.7% below start of recession Below recession start in 47 states Down > 20%: LA, SC, GA, ID Down 15 to 20%: UT, FL, AZ, AK, NM, OK, NJ (Table in appendix)

5. 5 Rockefeller Institute of Government Most states face significant 2012 gaps Per CBPP, at least 42 states face budget gaps for 2012 $112b in total 18% of budgets

6. 6 Rockefeller Institute of Government Crisis hits school districts with a lag Budget politics favor school aid -- hit later and lighter. But it’s where the $ is… ARRA cushioned states, delaying state gov’t cuts. But states lose over $50b in 2012. ARRA cushioned impact of state cuts on school districts Property tax often takes 3-5 years to respond to housing price declines

7. 7 Rockefeller Institute of Government Education employment cuts already are historically deep Down 205k jobs from Sep 2008 peak (-2.5%) Over last 2 years, down in 20 of 35 states with data Down more than 5% in: CA, MI, GA, IN, SC Down 3-5% in NC, OR, NJ, AZ Up more than 3% in TX, AK, WY, ND

8. 8 Rockefeller Institute of Government Education cuts deeper than most past recessions and (slightly) deeper than tax revolt of the 1980s

9. 9 Rockefeller Institute of Government Crisis hitting schools, will continue At least 34 states have cut some aid to education (CBPP) At least 21 states proposing K-12 cuts for 2012 (CBPP) Property tax: 77% of school district local revenue. Starting to weaken: –declining in many parts of CA, FL, and VA –growth slowing in other states

10. 10 Rockefeller Institute of Government Longer-term pressures loom Pensions – required contributions will increase rapidly Retiree health care – also will increase rapidly. More controllable Medicaid – pressure on states Federal budget cuts

11. Rockefeller Institute The Public Policy Institute of the State University of New York 411 State Street Albany, NY 12203-1003 www.rockinst.org Donald J. Boyd, Senior Fellow boydd@rockinst.org

12. 12 Rockefeller Institute of Government Appendix

13. 13 Rockefeller Institute of Government Tax revenue still below start of recession in 47 states

14. 14 Rockefeller Institute of Government Great variation in home-price changes