Position Paper on Education Finance and Reform
For Utah Foundation Forum on September 7, 2006

Submitted by Utah State Superintendent of Public Instruction Dr. Patti Harrington on behalf of the Utah State Board of Education

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• Also see an appendix, with details on one-time spending ideas.

I appreciate this forum and the invitation to represent the Utah State Board of Education in responding to Paradox Lost, the publication of the Utah Foundation.

The Utah Foundation has identified an enormous concern in funding for public education, exposing the fact that Utah’s efforts in funding for schools have dropped dramatically since 1995 and now represent a smaller share of each $1000 of personal income than in previous years.  This not only makes Utah the state that spends the least per pupil, and this by hundreds of dollars to the next lowest state, but also now indicates that while Utah’s effort in the past was strong, it has weakened considerably, and is at best, less than an average effort.  This effort is notwithstanding the large increase appropriated by the Utah Legislature in 2006, an infusion that was much larger than in recent years and achieved with the strong support of legislators, board members, and governor alike.

Understandably, the Utah State Board of Education (USBE) and local boards of education are deeply concerned about this troubling trend.  Increasingly, children are coming to our schools with large disparities in their abilities.  We receive children in our kindergarten classrooms that have developmental language like a three-year old and who do not recognize the front from the back of a book.  At the same time, perhaps in the same classroom, come children who are already reading with some proficiency, like an eight-year old might read, even though the child is only five years old.  Teachers are expected to reach each one and further their skills, meeting standards set forth by the State Board of Education for each grade.  Teachers and administrators face these dilemmas in many classrooms and at every grade.  Great teachers make inroads on these challenges, yet poverty and the lack of early childhood stimulation create chasms of learning that are very difficult to backfill.

Much has been said about the achievement gap in Utah.  My own word for it is “pernicious.”  It must be closed if you and I are sincerely interested in the vitality of our state in the future.  The future belongs to families and only when there is stable income and fluency in English will families be able to sustain themselves in the United States.  Some of the best work we can accomplish is to help a child learn English and begin to read with ability.  English Language Learners, or ELL for short, is one group for whom the achievement gap is most pernicious, and they come to our schools at every grade level, not just in kindergarten.  Our methods of teaching ELL students are research-based and targeted, but our efforts require new money, over and above that of the traditional classroom.  You cannot eliminate a traditional classroom teacher when you hire a teacher for ELL students:  both are needed.  Thus, the expense is great and the need is clear.
The gap is related to poverty, not minority status.  We have bright and excellent students from among all of our ethnic subgroups.  Some, however, suffer the effects of generations of poverty and thus are challenged with trying to construct meaning in literacy and application in math.  They, too, demand additional resources and help that are more than what can be provided by the regular, but able classroom teacher.

I needn’t further rehearse the needs in our schools in Utah.  And many of these needs are not just for the disadvantaged.  We have needs to grow our acceleration options and to expand our advanced courses, world languages, and internship opportunities, to name a few.  I believe we all agree that our educators do a remarkable job of teaching our precious children in our communities.  And some of us feel that more must be done to ensure hope and excellence for all children.  So, what of the future?

Utah has, for the past two years, enjoyed a highly successful economy, spurred by innovation and enterprise of those who likely attended public schools just a decade or two ago.  For two years, the state has seen a so-called surplus of tax revenue, particularly in income taxes.  But of course, certainly no more money has been collected than is due. 

Decades ago, under the weight of the Depression, visionary Utahns set aside their income taxes specifically to benefit their children in their public schools.  In 1996, a vote of the people decided to slice income tax revenue in two ways:  to fund public education and to fund higher education.  While there is still debate as to that vote, Utahns made their choice.   What they didn’t choose and what they still do not want is for public schools to be underfunded and potentially uncompetitive with schools throughout the nation.  What Utahns want are teachers who are well paid and dedicated to providing a myriad of rigorous learning experiences for their children, experiences in the arts and sciences, in physical education and in extracurricular and leadership opportunities.  What we cannot afford in Utah is to lose great young teachers who are now making the decision to move to Wyoming where they will start at salaries that are 30 percent more than what we offer in Utah.  We, as public educators, can only provide excellence on a slim dollar for so long, and then we will be passed up by systems and states that feed their schools and their children a rich supply of well-compensated teachers, computers, software, tutoring, summer studies and ample access to textbooks, literature, and library materials. 

The $351 million of underestimated revenue is not a surplus, but an opportunity.  Let’s call this money “Opportunity Funds.” We must match the opportunity with the will to provide our children with excellence in their schools. The Board seeks to increase funding streams in public education, in part with underestimated revenue, but even more, through taking six key actions to create a stable and healthy funding stream for our schools.  I will speak of stabilizing and increasing funding streams first, and then talk briefly about how innovation and efficiency might bring about continued academic excellence in the use of those revenues.

Increasing Funding Streams.  First:  Put the “Opportunity Funds” to Work for Our Children.
Just as the state puts away 25 percent of leftover income tax funds into a rainy day fund, let us also deposit 25 percent of these “opportunity funds” into a public education fund.  Money could accrue and the interest it derives could be used for ongoing needs such as tutoring, summer studies, electronic course options, ELL teachers, specialized endorsements in reading, math or the arts, and other needs that are performance-based.  During rainy day years, when the Utah economy suffers, as surely it will again, this fund might continue to provide stable income for our committed and patient teachers.

Second:  Allocate a Portion of Ongoing Money for One-Time Use.
One hundred million dollars of ongoing income tax revenue could be dedicated to one-time public education needs.  The use of ongoing money for one-time needs provides a buffer that can be used to absorb revenue shortfalls in times of economic downfall – an economic shock absorber, if you will.  This move would not “grow” the budget as some seem so worried about, but it would add significantly to solving some of the needs we have for our children in our schools.  One time needs include computers, software, textbooks, earthquake assessment and preparation, physical education equipment, musical instruments, replacement of worn-out buses, repair and upgrading of playgrounds, science lab equipment, and more library books, to name a few.
[Note: Also see an appendix, with details on one-time spending ideas.]

A Third Idea to Stabilize Funding:  Keep Current Funds Available For Our Schools.
Do not cap the School Trust Lands funds. Let them grow in support of our children. These funds are deliberately allocated to enhance public schools and are well used through local decision making by school community councils with oversight by local boards of education.  Let School Trust Lands funds also be used primarily for performance-based classroom initiatives.  Know this, that in spite of those who love to talk the “black hole of education” talk, it doesn’t exist in Utah.  The State Board has wrapped accountability around every dollar that has been sent to schools since U-PASS was implemented and the Board regularly measures results on student achievement.  The culture in Utah’s schools has changed and we now speak of measuring learning outputs, not educational inputs.  Local boards of education and councils have been a significant part of this cultural shift and Trust Lands funds provide the local fuel by which such change is driven.

A Fourth Idea to Increase Funding Streams:  Allow Property Taxes to Work Locally In Our Classrooms.
Eliminate the reduction of the statewide basic property tax rate.  Currently, the basic rate assessed on property in each community or city in Utah floats up or down to keep the amount of money coming into a district steady.  Thus, the increasing value of property and the associated increased taxation does not increase in behalf of our children and is, instead, fairly stagnant.  But the costs of education are 85 percent personnel-intensive and our work to attract and retain the finest educators cannot be stagnant!

If we kept the rate steady at its current level through the year 2014, we would provide additional funding that could be used to help alleviate the challenges arising from a growing and increasingly diverse student population.  Additional property tax revenue will also add stability to education funding.  A greater reliance on property tax revenue will ensure local control by allowing locally elected officials to meet district or school-specific needs.

Perhaps state collection and distribution of centrally assessed property (large commercial properties) could be used to smooth out learning equity issues that are often introduced into the lives of children through poverty and/or be used to provide parity to charter schools.  Not all children who suffer the effects of poverty attend a Title 1 school where additional federal dollars are allocated.

Stabilizing Principle Number Five:  Revenue-Neutral Tax Reform.
Ensuring a revenue-neutral tax reform package will not harm public education and will provide enhanced public education funding streams in the future.   The quality of schools in a location is far more likely to attract businesses to Utah than just a taxation change alone.  Income taxes in Utah have been cut three times in the past decade and a fourth cut is being contemplated this month in a rapidly-called Special Session of the Legislature.  The goal of tax reform in the past few years in our state has been to create a more equitable and stable tax structure.  Now, however, some are calling for a tax cut regardless of whether taxes are simplified or stabilized.  Some cite economic competitiveness as the need for a tax cut.  Yet, Utah’s economy is one of the strongest in the nation. 

The State Board supports tax reform that:

• will hold public education harmless from:
  • revenue reductions
  • strictures on future revenue and budget growth
  • other potential adverse effects
     
• provides sufficient revenue to:
  • accommodate current and future enrollment growth
  • cover inflationary costs
  • pay for educational initiatives that improve student performance
     
• does not hamper the legislature’s ability to fund public education in the future.

An income tax cut, without replacement revenue from another source, will further erode the state’s public education funding effort.  Any reform efforts should be revenue-neutral with respect to education funding.

Finally, In Order to Stabilize Education Funding:  Let the People Decide.
Establish a referendum of the people to define the use of income tax for public and higher education.  Since 1996, higher education has had to be a stepchild to public education, gleaning what might be reserved to them of sparse income taxes along with some general funds.  As a result, and not surprisingly, college tuition has skyrocketed and likely a result, completion rates for college students have suffered.  Further, there has been a long and sustained call from parents across the state who desire a greater allocation to public education than is currently being made from state revenue.  Parents want smaller class sizes and more individualized help for their children.  Therefore, we call for the initiation of a referendum or legislation that accomplishes three purposes:

1. Increases the revenue stream devoted entirely to public education and defines that which will be used for higher education.
2. Protects that revenue from use for other state purposes.
3. Ensures that public school students receive a solid and adequate education.

Much might be learned from neighboring states that have taken similar action.  In Colorado, a constitutional amendment requires that the statewide per pupil base and the categorical program allocation increase each year by the cost of inflation plus one percent from 2001-2011, and by inflation thereafter.  In California, there is a minimum amount of funding guaranteed for elementary and secondary schools and community colleges that is based on the prior year’s funding adjusted for inflation and growth, with protection from lean economic years. 

Other possibilities for Utah’s consideration include ensuring that income tax revenue cannot be capped nor diverted when revenues are strong, nor could spending be less than a lowest acceptable level when revenues weaken.  It might also include a prohibition on reducing income tax rates or adding deductions or credits until education funding reaches sustained desired levels, such as the western states’ average or another level that ensures a supply of quality teachers and educational opportunities for students that maximize learning and lead toward success.

These are six ideas for stabilizing or increasing the funding streams for our public schools.

I think of early settlers in Utah with fondness, not because they are my progenitors, but because they had such foresight.  Reservoirs dot our dry state and give us hope during hot September days and drought-prone years.  These reservoirs are fed daily by mountain streams which provide ongoing sustenance to refill the void and provide for downstream use, measured to the amount needed per community.

School funding could be like our reservoirs.  We have the opportunity, with unbudgeted revenues and reform ideas to create mountains of cash to flow into public education reservoirs, giving hope to our children to have a world-class education.  Such reservoirs of educational dollars could be fed annually by dedicating a percentage of underestimated dollars, by using ongoing money for one-time needs, and by an uncapped School Trust Lands fund, governed by parents in local communities.  These reservoirs could be further filled up by fixing the basic property tax rate at its current low level through 2014, through the enrollment projected to hit our schools, and allowed to generate the dollars associated with increasing property values.  Stabilizing reservoirs for school funding will be enhanced by cautious and insightful tax reform so that there are no leaks in the dam or diversion of precious dollars.  Finally, the coffers in the reservoirs can be controlled or influenced in their use through a vote of the people who might declare how they want to preserve or use the carefully stored funds.  Let us be as wise as our pioneer forefathers and as selfless as our grandparents who survived the Depression.

There are many ways that the improved funding I have identified could be used, but I would like to suggest one sample beyond those already mentioned for one-time funding.  This idea would preserve local decision-making, make inroads on learning for all children, both those who are challenged and those who are accelerated, and provide for smaller class sizes, the plea of parents over several years in Utah.

Allocate the equivalent of a decrease of one student per classroom, K-12, in class size reduction, beginning in the 2007-08 school year and continuing each year through 2010-11 (total of four students per classroom), specifying that the amount allocated must be used in such a way as to provide for smaller class sizes during instruction in literacy and math.  The reduction cannot directly lead to building new classrooms or schools or to hiring unprepared teachers.  Further, the reduction will be calculated annually so that there is a clear tracking of the funding, with districts and schools showing the specific FTE increase related to class size reduction. 

Districts might use the money, for example, to establish a first year teacher mentoring program by placing early career teachers with those of great experience, or it may be used to extend the kindergarten day to an optional full day for students at risk.  The money might be used to hire an English language teacher to give individual attention to the needs of those learning English as a second language.  The money might also be well used to hire a teacher of art, music, physical education, or a library educator who would take half of two classes for an instructional period, leaving classroom teachers with half their class size to work on literacy and math with diligence, while the other children extend their learning in the arts, physical education, library skills, etc.  This idea is one of many that would extend the reach of our teachers so that they might be able to focus on each child each day.  Other ideas are in the wings as well, including ways by which we might continue to introduce effective but inexpensive electronic studies for students who desire that avenue of learning.

Hundreds of millions of dollars in Utah’s tax collection is not a surplus to be handled quickly in a Special Session, it is an opportunity to carefully invest in the future of our children.  Let’s have the will to put it to work in our public schools.

I express my appreciation, on behalf of the Utah State Board of Education, for the opportunity to speak about the value of public education and the potential we have to stabilize revenue streams for our schools.  I love the children in our schools and appreciate your trust in me, as state superintendent, to serve them, their dedicated parents, and their remarkable teachers.  Thank you.