Thursday, April 3, 2008

The Truth About QBE Austerity “Cuts”

Advocates of big government routinely claim that reductions to projected budget increases are the same thing as budget “cuts,” even as the budget in question continues to expand. Needless to say, this claim is as specious as it is pervasive – which brings me to the question of QBE funding.

For those who may not know, Georgia’s Quality Basic Education Act (QBE) dates from the 1980s. The legislation did a lot of things, but over the years most of the focus on QBE has concerned the state’s funding of public education. Specifically, QBE established an arcane and convoluted formula for determining the state’s annual contribution to local school systems. The economic downturn of a few years ago predictably resulted in a reduction of state revenue, hence “austerity reductions” were introduced into QBE funding as a cost savings measure.

To paraphrase Maus, it was here that the troubles began. That is because even though the austerity reductions have continued, the actual cuts to funding lasted for two years only. Since then, the state’s QBE funding to local school systems has grown dramatically. The political demagoguery of the issue, however, has continued apace.

As is my custom, I will use the Clarke Count School District to illustrate the point. We will assume FY 2002, the fiscal year prior to the introduction of austerity reductions, as a baseline: FTE is “full time equivalent” student, that is to say the CCSD’s number of students; QBE is the total of state QBE funds contributed to the CCSD; and Austerity Reduction is the difference between QBE earnings according to the formula mentioned above and the actual number of dollars contributed to the CCSD for each fiscal year indicated.

FY 2002
FTE 10,921
QBE $43,134,498
Austerity reduction $0
Per pupil $3949.68

FY 2003
FTE 10,989
QBE $42,394,751
Austerity reduction $1,119,072
Per pupil $3857.93

FY 2004
FTE 11,122
QBE $40,583,318
Austerity reduction $2,321,688
Per pupil $3648.92

FY 2005
FTE 11,258
QBE $41,258,951
Austerity reduction $2,719,741
Per pupil $3664.86

FY 2006
FTE 11,311
QBE $43,309,132
Austerity reduction $2,719,717
Per pupil $3828.94

FY 2007
FTE 11,415
QBE $46,766,651
Austerity reduction $1,342,765
Per pupil $4096.95

FY 2008
FTE 11,834
QBE $49,948,819
Austerity reduction $1,100,429
Per pupil $4220.79

As can be clearly seen, actual budget cuts occurred in FY 2003 and FY 2004 only. Despite the continuance of “austerity reductions,” though, QBE funding to the Clarke County School District has risen in every subsequent fiscal year in both absolute and per pupil terms. Even with austerity reductions totaling $11,323,412 over the period, the state’s QBE contributions to the Clarke County School District have increased by 15.80% (6.84% per pupil) from the FY 2002 baseline and 23.08% (15.67% per pupil) from the FY 2004 nadir. Remember this the next time someone decries state “cuts” in education funding, which will happen presently as the CCSD budget for FY 2009 begins to take shape.

Feel free to verify these figures for yourselves; with the exception of per pupil and percentage calculations, which are mine, they are all taken from the Department of Education’s Mid Term System Allotment Sheets for the CCSD spanning the period FY 2002 through FY 2008. And yes, I spoke to the DOE's Financial Review folks to make sure that I was reading them correctly.

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hillary said...

Could you talk a bit about what the formula requires in order to have full funding of schools?

hillary said...

That is, presumably some reasons that the state could be providing more total dollars but doing less to meet its requirements are increases in energy costs or the state legislature enacting maximum classroom sizes, which requires greater investment in teacher salaries and classrooms.