New Report on Education Finance Will Raise Eyebrows

“Educational Spending: Kentucky vs. Other States,” by University of Kentucky economists William H. Hoyt, Ph.D., Christopher Jepsen, Ph.D. and Kenneth R. Troske, Ph.D. is going to surprise a lot of people in Kentucky.

These respected UK economists looked at the money Kentucky spends on P to 12 education, and some of their findings are indeed remarkable. For example:

• Since KERA’s enactment, Kentucky has surpassed all other states in the US Census Bureau’s South-Central region in current expenditures per pupil, rising from fifth to first place ranking among the eight states in the region.

• The gap in current per-student expenditures between Kentucky’s metropolitan and non-metropolitan districts fell from $600 in 1987 to $10 by 2006.

• During the KERA era, districts in the eastern Kentucky went from having the lowest level of per-student expenditures to having the highest. In other words, education spending in our Eastern districts is no longer the same old excuse that it used to be.

• The gap between Kentucky and other states in per-student expenditures narrowed from $2,747 in 1987 in 1987 to about $1,500 in 2006.

In addition, the UK scholars indicate that the way tax supports for schools are divided among local, state and federal sources has acted to reduce local taxpayers’ control over their schools in an inequitable way. While high-wealth school districts still derive an appreciable amount of their total funding from local taxpayers, that isn’t true in low-wealth districts, which are generally located in rural parts of the state. As a consequence, by resisting tax increases when schools don’t perform, parents and taxpayers in wealthier districts have a somewhat more effective say over what happens in their schools than parents in Kentucky’s poor districts do.

Thus Kentucky’s poor and rural school districts are more solidly held hostage to Frankfort and the sometimes peculiar education philosophies that emanate from the capital. Meanwhile, wealthier districts have been more resistant to Frankfort’s ideas and instead have kept a focus on rigorous coursework that better prepare kids for college and life.

Another shocker in the report is the very rapid rise in capital spending that occurred in the state after the 2002-2003 school year. Funding shot up from the lowest among the South Central States to nearly the highest, rising from little more than $200 to nearly $1,200 per pupil in only three years.

Considering that enrollment in Kentucky runs around 650,000 students at present, the latest funding represents a huge annual expenditure of nearly $800 million that no one seems to be talking about.

And, while the report doesn’t mention it, given that Kentucky’s expensive “Prevailing Wage” laws mean that a considerable part of this money is spent on inflated labor costs, the benefits for children are being watered down while special interests clean up at taxpayer expense. Those inflated costs don’t impact what happens in classrooms.

Another cost documented in the report is Kentucky’s high expenditure for administration. As of 2006, tables in the report show that Kentucky has some of the very highest per student administrative costs among the South Central States. Why is that, and are there potential savings here?

Overall, the report’s extensive tables and graphs provide information to raise all sorts of questions about how Kentucky is actually spending its education dollars. So, check it out. Lots of other people will be reading it.