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More stats for the fiscal debate

Colorado ranks 47th in the nation in total state spending per $1,000 dollars of personal income, and 45th in state spending per capita, according to a study released Thursday by the Colorado Fiscal Policy Institute.

Spending for K-12 schools and higher education is in similar ranges, said the report, which has an interesting title – “Aiming for the Middle.”

Data for the report, compiled primarily from U.S. Census Bureau figures, in most cases is at least a couple of years old.

“This data is from when the state’s economy was in good shape, so we know it only goes downhill from there,” commented Carol Hedges, institute senior fiscal policy analyst. Earlier this year state lawmakers had to make about $1.4 billion in cuts and transfers to balance the state budget, and more cuts are on the way as state revenues continue to shrink.

The rankings are similar to those reported in past studies and will be familiar to many policymakers and others who study and worry about the health of state government.

Public education advocates have long raised alarm about how Colorado supports schools relative to other states, even though the state constitution mandates (in most years) annual increases in state support of school districts.

But, there is debate and philosophical disagreement not only about such rankings but about the size of government, the effectiveness of public spending and appropriate levels of taxation. Those won’t end with the issuing of another report.

Here’s a rundown on the institute’s study, followed by background on other ways of looking at Colorado education spending. Links to further data and reading are at the bottom of this story.

The study

Colorado ranks 47th in total state expenditures per $1,000 of personal income and 45th in per capita spending. It would take $4.89 billion in spending to reach the per $1,000 U.S. average and $3.62 billion to reach the per capita average.

The state moved from 49th to 47th from 2006 to 2008, “but that was largely due to other states falling further behind, and not based on any significant improvements in Colorado,” the report concluded.
The study focused on state spending but noted that when state and local spending both are considered, Colorado ranks 44th on per capita and 31st based on personal income.

Colorado ranks 48th for for K-12 spending based on personal income and 32nd per capita. It would take $1.78 billion to reach the U.S. average based on income and $1.06 billion on the per-capita scale.
State spending for higher education ranks 48th for higher education both per $1,000 of personal income and per capita. It would take $761 million to reach the personal income U.S. average and $594 million based on per capital.

The study also ranked state spending on children’s health programs and Medicaid, and highways. The document didn’t look at prisons, another major part of the state budget.

“Colorado has a systemic revenue problem, plain and simple,” Hodges said. “The state simply doesn’t have the revenue needed to support the public services that Coloradans rely on, knowingly or not, every single day, and that’s a threat to our collective future and to our economy.

“We invest so little relative to nearly every other state because we collect so little,” she added Hedges. “Colorado ranks 49th in state taxation and 46th in combined state and local taxation (per $1,000 personal income).”

Other ways to slice the onion

Other observers (including anti-tax types like the Independence Institute) argue that personal income and per-capita comparisons aren’t the right well to tell the spending story.

And, professional education researchers look at the spending in different ways.

The National Center for Education Statistics reports that for 2004-05, Colordo per-student spending (excluding capital costs) was $9,241, above the national average of $8,701 and 34th among the 50 states and the District of Columbia.

The annual Quality Counts study, done by Education Week, ranks state on a variety of factors, including a complicated set of financial ones. The most recent Quality Counts, released last January, ranks Colorado 26th among states with an overall grade of “C” for school finance (“A-“ for equity but “F” for spending). That study lists 2006 Colorado per pupil at $8,514 – “adjusted for regional costs difference” and says the state spend 3 percent of “total taxable resources” on education.

For higher education, state policymakers have relied on (but not implemented) a 2007 study by the National Center for Higher Education Management Systems that compared support for state institutions to comparable colleges and universities in other states. That study said, “The first set of calculations shows that Colorado higher education institutions receive only approximately 63.3 percent of the funding of their peers. As a comparison, a review of K-12 education funding shows K-12 schools in Colorado are funded at 92 percent of the national average.” (Full NCHEMS study.)

The Fiscal Policy Institute’s paper concludes, “It is time to advance the public discussion about the price we pay for our current investment strategy. … Are we ready to do what we must to be competitive, to create the kind of community we all want? Are we prepared to renew our commitment to education, health care and transportation, even if we know it will require significant new dollars? The answers beg the question: What kind of Colorado do we really want?”

Perhaps not so coincidentally, that discussion is about to get underway beneath the rusting dome of the state Capitol. A legislature interim committee that’s studying the school finance system convenes its first full meeting on Monday. Another panel assigned to review state “fiscal stability” convenes on July 8.

Do more homework

Full institute report (discussion of K-12 is on page 3-4; higher ed is on page 6-7)
Fiscal Policy Institute home page
Independence Institute 2006 analysis of school spending

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