State Has Cut Education Funding Substantially from Pre-Recession Levels

The recession and weak recovery of the last few years have meant less revenue for the state budget, and the legislature has responded with cuts to many services. The state has not spared education in those cuts. Federal emergency education aid has helped blunt the impact, but the end of that federal support in a still-weak economy presents a real challenge to Kentucky’s education system.

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State Has Cut Education Funding Substantially from Pre-Recession Levels

The recession and weak recovery of the last few years have meant less revenue for the state budget, and the legislature has responded with cuts to many services. The state has not spared education in those cuts. Federal emergency education aid has helped blunt the impact, but the end of that federal support in a still-weak economy presents a real challenge to Kentucky’s education system.

In constant, per student dollars, state funding for the primary and secondary education system is nine percent lower in 2011 than it was in 2008. State funding for higher education is 20 percent lower (see Figure 1). Stagnant or declining funding levels as well as rising enrollment in postsecondary education (in part due to the weak economy) have contributed to this decline.¹

Figure 1

Sources: Author’s calculation using data from Office of the State Budget Director, Kentucky Department of Education, Kentucky Council on Postsecondary Education

The impact of these cuts would have been even greater if the federal government had not provided emergency education aid as part of recovery-related legislation over the last few years. Those dollars are not reflected in Figure 1. Kentucky received $1.2 billion for the primary and secondary system and $137 million for higher education (see Figure 2).³ In the two-year budget for 2011-2012, the state was able to make up for less federal primary/secondary aid available in 2012 by allocating more state dollars to that year’s budget.  However, the federal aid comes to an end this year, and additional support is being held up by debates about the deficit.

Figure 2

Source: Author’s calculation using data from the Office of the State Budget Director

That presents Kentucky with a challenge as lawmakers begin meeting in January to craft a new budget for the next two years. Primary/secondary and higher education make up over half of the state’s General Fund. Spending levels for many state services, including Medicaid, are expected to remain elevated because high unemployment means greater eligibility and need. And the economic and revenue outlook are very uncertain.

Lower education spending takes dollars out of local economies, harms our prospects for long-term growth and prosperity, and impacts Kentuckians’ quality of life. It also particularly harms the poorest students. Most state primary/secondary education funding goes to the Support Educational Excellence in Kentucky (SEEK) formula, which helps equalize funding between schools by providing greater financial assistance to poorer school districts. Cuts to state funding for higher education lead to tuition increases and to restricted access to financial aid.

Given economic conditions, Kentucky needs the federal government to provide additional short-term education funding as part of a plan to create jobs. And state lawmakers should be having a conversation about new revenues through needed reforms of the state tax system as part of the new budget.