1 National Perspective K-12 and Higher Ed. Finance Issues November 12, 2009 Harrisburg, Pennsylvania

2 Education Commission of the States The only nationwide education interstate compact Founded in 1965 to enlighten, equip and engage education policy makers 53 member states, territories and the District of Columbia Web Site:

“May You Live in Interesting Times” Fictional English Translation of a Chinese Proverb 3

Outline Current K-12 & Higher Education Spending Historical Perspective The American Reinvestment and Recovery Act Looking into the future 4

K-12 Funding (Dollar amounts are in billions) Federal StateStabilization Total FY 08 $221 $ 0$221 FY 09 $223 $10$233 (+5.4%) FY 10 $214 $17 $231 (-0.9%) 5

Funding For Higher Education Institutions (Dollar amounts are in billions) Federal StateStabilization Total FY 08 $61.7 $ 0$61.7 FY 09 $60.6 $2.7$63.3 (+2.6%) FY 10 $57.5 $3.9 $61.4 (-3%) 6

Projected for FY 2011 ( Dollar amounts are all in billions) Federal StateStabilization Total K-12 $214.0 $4.4$218.4 (-5.5%) (-$12.6) Higher Ed. $57.5 $1.1$58.8 (-4.2%) (-$2.6) 7

8 Concerns It traditionally takes 18 to 24 months for state budgets to recover after a down-turn A recovery is not currently projected until the fall of 2009 If these projections hold - state budgets would not begin to recover until the fall of 2011 or the winter of 2012

Pennsylvania’s Stabilization Fund Spending FY FY FY PA 4% 48% 48% ($748 million) USA32.5%53.5% 13.9% 9

10 Education Spending Per Student Source: NCES

11 Education Revenue Sources Source: NCES

Issues with Local Funding During the 90’s several states instituted taxation/spending caps – how will these caps impact education spending? If we see reductions in state spending combined with increases in local spending what will this do to funding gaps? 12

American Reinvestment & Recovery Act 13

Award Programs Race to the Top (RTTT, RTT, RT3) –$4 billion –Open to states –Two rounds of award –15 projected winners –Approximately $270 million per state State Testing Systems –$350 million –Open to states –Details will be coming in a few months 14

Award Programs Innovation Fund (i3) –$650 million –Open to schools/districts and non-profit partners –Winners must produce a 20% match –Three awards $50 million $30 million $5 million 15

Issues With Federal Funding Will there be a second round of federal Stabilization funding Federal funding will move from 9% of education spending to between 16% & 19% - will this have a long term impact What changes will come about with the reauthorization of the Elementary & Secondary Education Act (NCLB) 16

17 Questions & Comments Michael Griffith Senior School Finance Analyst Education Commission of the States Denver, Colorado (303)