Saturday, January 8, 2011

State funding cuts (some context)

SEEK funds to school districts will be cut for the remainder of this year, by roughly $50 million.

That translates to about $85 per student. It's about 2 percent of previously promised funding from the state, and about 1 percent of total funding per year.

Commissioner Terry Holliday, in announcing the cuts, pointed out that federal EduJobs funding of about $150 million dollars will enable districts to cover this loss without immediate cuts.

These cuts reflect growing local needs, rather than shrinking state revenue.  SEEK funding is allocated based on average daily attendance, and that ADA count appears to be 10,000 higher than expected.  In addition, local property tax revenue is down, and under the SEEK formula, that makes the state responsible for more of the base guarantee.

Watch closely for the impact on next school year.  The budget passed last year promised that SEEK funding would go up for 2011-12, but that assumed a lower ADA.  If ADA stays this high or goes higher, that promise will be very hard to keep.

Finally, remember that property tax revenues do not go down instantly in a recession: some properties that lose value wait one or more years before the official assessment is reduced.  If we've seen a one-year decline in property revenues, we may have several more years of decline ahead.

Thus far, Kentucky education funding has taken much less damage than some other states during this horrible recession.  This week's news suggests that the most important damage may still be to come.

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