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The 2008 state legislative season launches this month under a fiscal cloud in a number of states, where ambitious education initiatives鈥攊ncluding expanded pre-K programs, college- or career-preparation efforts, and improved teacher pay鈥攎ay end up being balanced against gloomy revenue projections.
鈥淚t looks like we have one more decent year before things fall apart,鈥� Julie Bell, the education program director for the , said about the fiscal 2009 economic outlook, coming on the heels of a year in which 15 states have reported deficits or revenue shortfalls.
A revenue slowdown鈥� and by the and the National Association of State Budget Officers, in Washington鈥攃omes as states prepare to tackle such potentially costly issues as education equity and adequacy and the condition of school facilities.
California, for example, is expected to take up school governance and finance in what Gov. Arnold Schwarzenegger, a Republican, has said will be the 鈥測ear of education鈥濃�攅ven as he warns of a 鈥渇iscal emergency鈥� facing the state, in the form of a projected deficit of up to $14 billion in the next year and a half.
鈥淭hat鈥檚 more than the budget in some states,鈥� William Pound, the executive director of the NCSL, said in a Dec. 14 Web seminar on the top 10 state legislative issues for this year nationwide.
He added that California and Florida鈥攁nother state reporting a shortfall鈥攈ave both been hit hard by the U.S. housing slump. As a result, education priorities could end up competing with lawmakers鈥� desire to help homeowners facing foreclosure. Transportation needs and rising health-care costs are also likely competitors for state attention.
Legislatures in several states, such as Florida and Georgia, also have been trying to respond to homeowners鈥� frustration over increasing property-tax rates. The issue will come to a head in Florida later this month when voters decide on a constitutional amendment that could save taxpayers more than $9 billion over the next five years. Education groups, firefighters, and local governments warn that the plan would severely hinder schools and other local services.
In addition, Mr. Pound said, 21 states late last year projected shortfalls in their State Children鈥檚 Health Insurance Program for fiscal 2008, which Congress voted to expand and reauthorize, a move President Bush vetoed twice. In late December, Congress extended SCHIP funding through March, though the issue remains unresolved, and some states expect shortfalls even beyond the extension period.
Despite such concerns, 16 states have told the NCSLthat K-12 education鈥攚hich, along with health care, typically accounts for about half of a state鈥檚 general-fund expenditures鈥攊s among the top priorities for 2008.
Previews of Plans
By month鈥檚 end, lawmakers will be back at work in two-thirds of the states. And while most governors will wait until their State of the State addresses to announce their education initiatives for this year, a few have already previewed their top priorities.
Alabama Gov. Bob Riley, for example, has announced a proposal to build the state鈥檚 existing, but small, prekindergarten program into one that serves 21,000 4-year-olds by 2011. Growth would begin in fiscal 2009 with $30 million to serve 7,600 children from low-income and middle-class families in the Alabama First Class Pre-K program.
鈥淭here are few investments the state can make that will pay off as well in the long run as voluntary pre-K,鈥� the Republican governor said in a Dec. 6 press release. 鈥淔irst Class advances a big goal while remaining fiscally responsible.鈥�
For more stories on this topic see Finance.
In New Jersey, Gov. Jon Corzine, a Democrat, will push to expand full-day preschool to all disadvantaged 3- and 4-year-olds. But that push could be complicated by his proposal to overhaul New Jersey鈥檚 school funding formula in way that would eliminate the special-needs-district designation that funnels money to the state鈥檚 poorest districts. (鈥淣.J. Governor Seeks to Overhaul School Financing,鈥� Dec. 12, 2007.)
Gov. Corzine has been pushing hard to have a new formula, which would link funding levels to students needs and their communities鈥� ability to pay for schooling, enacted in time for the 2008-09 school year. But any such formula would have to pass muster in the state courts. Funding for New Jersey鈥檚 poorest districts has been set under guidelines from the state supreme court stemming from the long-running Abbott v. Burke finance case.
Meanwhile, Ms. Bell of the NCSL said states continue to be interested in advancing the readiness of high school students for college or the job market.
鈥淎re they the same thing? I think states struggle with that,鈥� she said. 鈥淭here is interest not in a track, but a separate pathway.鈥�
Programs in career-technical education, for example, continue to grow in states such as California, Florida, and South Carolina, with such initiatives as career academies focused on 鈥済rowth industries鈥� and requirements that high school students declare 鈥渕ajors.鈥�
Also at the high school level, Ms. Bell sees a growing emphasis on combating dropout rates through innovative approaches such as 鈥渆arly-commitment programs,鈥� meaning that low-income students are guaranteed money for college if they complete high school or graduate with a certain grade point average in college-preparatory courses.
鈥淚t鈥檚 a dropout issue, but it鈥檚 also a student-aid issue,鈥� she said.
Indiana and Oklahoma have been the leaders of that trend, with programs that target disadvantaged middle school students with a promise of financial aid for college.
鈥淭his blends need and merit, but merit not defined as being brilliant, but trying hard and taking the right courses,鈥� said David Longanecker, the president of the Western Interstate Commission for Higher Education, a regional organization based in Denver. 鈥淎t least in the West, there is much more interest in need-based financial aid.鈥�
He added, however, that he sees less enthusiasm among state policymakers for scholarship programs that are strictly merit-based, such as Georgia鈥檚 HOPE Scholarship, because they are expensive鈥擥eorgia alone budgets more than $500 million a year for its program.
In keeping with the theme of linking high school and college, Ms. Bell said she is also seeing renewed interest in the concept of building a preschool-through-graduate-level, or P-20, education system that includes smoother transitions and stronger links between governance and finance across those levels.
Even though the idea has been around for a long time, she said, state legislators 鈥渞eally do want to think about this very formally.鈥�
Colorado Gov. Bill Ritter, for example, is leading an effort to build a P-20 system that would include assigning a 鈥渦nique child identifier鈥� to children in publicly funded programs that would be used to follow their progress throughout their educational careers and unify the state鈥檚 educational data systems. Only Florida now has such a comprehensive data system.
Pay and Benefits
While discussion about alternative models of teacher compensation and efforts to aid teacher retention is likely to continue, Ms. Bell said another emerging trend involves pay packages that include not only salary and benefits, but also retirement incentives.
Teachers, she said, are both 鈥渃hoosier鈥� about their compensation and nervous about whether their pension payments will be there when they need them.
According to a 2007 survey conducted by the National Association of State Retirement Administrators, pension funds for public employees are adequately funded. Their future liabilities are funded at an average level of about 86 percent, which Ronald Snell, the director of the state-services division of the NCSL, described as 鈥減erfectly acceptable.鈥�
Greater concern, however, exists over states鈥� ability to pay for retiree health-insurance coverage.
鈥淭he big question will be, 鈥楧o we have the fiscal base in state government to do this along with the increasing cost of transportation and health care?鈥� 鈥� Mr. Snell said.
He added that he expects some states to pay attention to the issue this year because of new financial-reporting requirements that are taking effect.
States, as well as federal and local government agencies, such as school districts, are now required to disclose their long-term costs for employee health and other insurance benefits under rules adopted in 2004 by the Governmental Accounting Standards Board. The independent, Norwalk, Conn.-based organization sets financial-reporting standards for government agencies. (鈥淎ccounting Rule Targets Benefits in Public Sector,鈥� March 22, 2006.)
If states haven鈥檛 been 鈥減refunding鈥� those obligations over the years, they will show up as liabilities under the new accounting rules, and rising health-care costs, combined with increases in life expectancy for retired public employees, will add to states鈥� financial burden.
鈥淪tate and local governments,鈥� Mr. Snell said, 鈥渇ace long-term commitments to provide health care without having the savings or the savings plans.鈥�
State-level Concerns
While legislatures across the country have some issues in common, many will also have specific matters to confront in their own states when they convene.
In Maine, for example, lawmakers are expected to take up proposals to change鈥攐r even repeal鈥攁 controversial school consolidation plan enacted last year, which calls for the state to shrink the number of school districts to about 80 from 290 by July 2009. (鈥淢aine Districts Take Key Step to Consolidation,鈥� Sept. 12, 2007.)
In Maryland, legislative leaders have said they may consider setting limits on the state school board鈥檚 authority to appoint the state schools superintendent, after the current board reappointed longtime Superintendent Nancy S. Grasmick, over the objections of Gov. Martin O鈥橫alley, a Democrat.
Nationwide, the presidential race is likely to have some impact on state legislative action this year, since lawmakers may take a wait-and-see position on education issues pending at the federal level, such as the reauthorization of NCLB, Mr. Pound said.
And the future policy landscape could also be shaped by the outcome in this year鈥檚 state elections.
At the gubernatorial level, Delaware Gov. Ruth Ann Minner and North Carolina Gov. Michael F. Easley鈥攂oth Democrats鈥攚ill be retiring this year because of term limits, leaving open seats. In nine other states, the incumbents鈥攆our Democrats and five Republicans鈥攚ill be up for re-election.
