Citizens within AAPS should expect continued, major cuts in funding from the state for K-12 education through FY 2011. The School Aid Fund (SAF) is the major vehicle used by the state for funding K-12 education. The following table shows the current and prospective status of the SAF. (The table works from the summary of the Conference Report provided by the nonpartisan House Fiscal Agency.)

School Aid Fund (SAF), FYs 2010 and 2011, million dollars

The first column of estimates, labeled “Conference Report,” reflects the actions to-date of state policymakers, which are not complete. Adoption of the Conference Report in its entirety would lead to a reduction of $165 in the foundation allowance per student plus many cuts in categorical programs. Such adoption is highly unlikely.

The second column of estimates adds factual information and judgmental estimates. Working down from the top and emphasizing changes from the Conference Report, on October 14, 2009, the State Treasurer notified the Governor the beginning balance from SAF funds other than ARRA would be $96 million. He also noted the updated projection of SAF revenue for FY 2010 is $10,434 million. In addition, Republicans continue to state their adamant opposition to any tax increase, which makes the House approved addition to revenue of $100 million doubtful.

The information from the State Treasurer and the position of Republicans, who control the Senate, make the Conference Report untenable unless policymakers choose to ignore reality for the moment and return to a mess of their own doing later. The sum of the beginning balance plus revenue is less than appropriated expenditures in the Conference Report if the new revenue of $100 million is not approved. We are left to our own devices to project the most likely outcome.

This analysis assumes Republicans refuse to enact legislation providing for more tax revenue and Democrats refuse to enact legislation moving funds from another program such as the earned income tax credit to the SAF. The $100 million increment to revenue disappears. This analysis also assumes policymakers will spend all of the funds available, with the exception of a nominal $50 million ending balance. The political storm stimulated by more cuts to education overwhelms the desire to carry over ARRA funds to FY 2011.

Using these assumptions, expenditures must drop to $12,748 million from the $12,878 million in the Conference Report. The decline of $130 million translates into an additional per student cut of $82 beyond the $165 in the Conference Report. If policymakers choose to carry over more than $50 million into FY 2011, the cut in FY 2010 would be larger. And finally, if the projection of the State Treasurer is too optimistic, additional cuts would be necessary to adjust to lower than projected revenues. Summing up, we should expect a cut of at least $247 per student, plus the cuts in categorical programs already announced, in FY 2010 from the state appropriations of FY 2009.

Turning to FY 2011, the drop of $680 million in the beginning balance overwhelms the modest growth of one percent in SAF revenue and five percent in federal funds. (These assumed rates of growth probably err to the high side.) Expenditures fall $496 million from FY 2010. State policymakers would need to cut another $180 per student to balance revenue and expenditures.

The cumulative cut over both FY 2010 and FY 2011 would be about $427 per student.