Most states report that funding for public schools will be their top priority鈥攁nd their most significant source of long-term financial pressure鈥攊n 2007, according to a 50-state survey released here this week by the Denver-based National Conference of State Legislatures.
Further information on the related is available from the .
The group鈥檚 fifth annual survey also found that although states鈥� tax collections are mostly on target and spending is within budgeted levels, policymakers are less optimistic than they were a year ago about their financial situations.
鈥淭hese are the perennial issues that are driving spending growth,鈥� Corina Eckl, the NCSL鈥檚 fiscal-program director, said of K-12 spending growth. Overall, she said, 鈥渨e鈥檙e pretty solid right now, but some hairline fractures are starting to develop.鈥�
Fiscal Barometer
The survey, conducted in November, serves as a barometer of states鈥� financial health and helps outline spending priorities for the upcoming legislative sessions.
The fiscal health of the states will determine how legislators shape their budgets. Most legislatures will craft new budgets starting in 2007, and K-12 education is one of the top line items in those spending plans. On average, states report that elementary and secondary education takes up 33.4 percent of their general-fund budgets, according to the survey. That鈥檚 inched up slightly since 1999, when K-12 spending took up 31.6 percent of state budgets, on average.
This year鈥檚 survey shows that legislative fiscal directors across the country are starting to worry.
A year ago, 22 states reported that they were optimistic about their budget conditions. This year, that optimism dropped to 16 states.
Compared with last year, fewer states are reporting that their revenue collections are above forecast, but more states say their taxes are coming in on target. Three states are struggling with revenues coming in below forecast: Maryland, Michigan, and Tennessee.
Another reason for concern: declining year-end cash balances in states鈥� general funds. At the end of the last budget year, states reported having nearly 10 percent of their general-fund expenses in reserves. At the end of the current budget year, that鈥檚 expected to drop to 6.5 percent.
Adding to the complexity of the 2007 budget-writing sessions are the newly elected leaders who will want a hand in shaping spending priorities. The 36 governors鈥� races in November resulted in 11 new faces; in state legislatures, 12 legislative chambers switched party control in a Democratic wave. Twenty-three legislatures are now controlled by Democrats, 15 by Republicans, and 11 are split. Nebraska鈥檚 unicameral legislature is nonpartisan.
Budget Pressures
In Massachusetts, 鈥渢he need to reinvest in higher education鈥� will be a big issue, said Sen. Richard T. Moore, who serves on the higher education committee in that state鈥檚 upper chamber. Funding for higher education suffered across the country earlier in the decade as states reduced support to public universities so they could try to stave off cuts in other programs, such as K-12 education.
The precollegiate issues facing states vary, Ms. Eckl said, but the overall issue will dominate the 2007 sessions. Some states are dealing with constitutional school funding issues, while others are working to improve school facilities and raise teacher salaries. Ms. Eckl said a few face shortfalls in their teacher-pension systems.
There鈥檚 no way to tell whether the slight deterioration in states鈥� fiscal health is a blip, Ms. Eckl said, or the start of a long-term trend.
Depending on the state, Ms. Eckl said, several factors are straining budgets: The Medicaid health program is eating up more money in some states, prison spending is over budget in others, and in some areas, corporate income-tax collections are down.
And, she said, the top priorities for legislatures, notably K-12 education, come with big, and growing, price tags.
