Kansas K-12 funding lags personal spending growth

Kansas’ investment in public education has been growing much slower than total income of Kansas residents and spending on most personal goods and services since 2010, according to new data from the Bureau of Economic Analysis. (Link)

The decline occurred as Kansas per pupil funding has fallen behind inflation and other states. There is a strong, positive correlation between education funding, educational attainment, higher state average income and lower poverty rates. (See previous posts on funding and the link between education and economic prosperity.)

The BEA annually reports personal consumption expenditures by state, defined as “goods and services purchased by or on behalf of households and the net expenditures of nonprofit institutions serving households (NPISHs) by state of residence for the 50 states and the District of Columbia.” (These figures do not include increased funding for school districts beginning in 2017-18 because income and spending data is not yet available.)

KASB compared Kansas personal consumption expenditures with total Kansas personal income and total expenditures on K-12 education by Kansas school districts as reported by the Kansas State Department of Education.

Between 2010 and 2017, Kansas personal income increased from $112.1 billion to $141.5 billion, or 26.2 percent. Personal consumption expenditures increased from $86.1 billion to $106.4 billion, a slightly lower rate of 23.7 percent.

Total school district expenditures increased from $5.5 billion to $6.1 billion, or 8.8 percent. School expenditures dropped from 5.0 percent of Kansas personal income in 2010 to 4.3 percent in 2017.

The 8.8 percent increase in K-12 expenditures between 2010 and 2017 was lower than any category of personal expenditures except for gasoline and other energy goods, which decreased 2.6 percent 2010 and 2017.

Expenditures on Financial Service and Insurance (37.2 percent), Food Services and Accommodations - dining out and lodging (31.6 percent), Housing and Utilities (29.0 percent), Recreational Services (28.9 percent) and Motor Vehicles and Parts (28.0 percent) increased faster than Kansas personal income.

Expenditures on Furnishing and Household Equipment (26.0 percent), Transportation Services (23.1 percent), Recreation Goods and Vehicles (21.8 percent), Health Care Services (21.5 percent), Food and Beverages Consumed at Home (16.7 percent) and Clothing (10.1 percent) increased less than personal income but more than K-12 expenditures.

The amount of spending on K-12 educational also ranks low compared to major personal expenditure categories. Kansas spent $21.9 billion on Housing and Utilities in 2017, $18.7 billion on Health Care Services, $17.7 billion on Financial Services and Insurance, $10.1 billion on transportation services, vehicles and fuel, $8.7 billion on Food and Beverages at home, $7 billion on recreational good ands services and $6.3 billion on Food Services and Accommodations (dining out and lodging), compared to $6.1 billion on K-12 education. Only Clothing and Footwear, at $2.7 billion, was lower than school district spending.

This data indicates that Kansas expenditures on public education have actually been a declining share of total income by Kansas since 2010, and that other categories of expenditure have growing faster than education funding. In fact, that has been true as far back as 2000. Since 2000, K-12 expenditures increased 74.6 percent, personal consumption expenditures 78.6 percent and Kansas personal income 84.9 percent.

There would be no problem spending less on K-12 education and more on personal goods and services if Kansas were getting the education results they want and need, and/or if funding made no difference in educational results. However, Kansas education funding has fallen behind inflation and other states, as have Kansas average teacher salaries. Although Kansas ranks above average national and regionally in educational outcomes, other states have been increasing funding more and improving results faster.

To meet future employment needs and compete with other states, Kansas needs to graduate more students from high school and postsecondary education. The states with the highest educational outcomes tend to spend more per pupil than most states, already spend more than Kansas; and have higher personal income and lower poverty rates. If Kansas continues to spend less on K-12 education, it will ultimately mean less personal income to spend on everything else.

There is another impact of personal expenditure changes. Since 2000, spending on “goods” has increased by 56.1 percent and spending on “services” increased 92.5 percent. Because the Kansas sales tax is generally applied to goods and not to services, this shift in consumption from goods to services is one major reason state revenues have been growing more slowly, and why lowering state income tax rates and relying more heavily on consumption taxes that do not includes services will likely further reduce revenues for public services like K-12 education.

Definitions:

Total personal income is the income received by, or on behalf of, all persons from all sources: from participation as laborers in production, from owning a home or business, from the ownership of financial assets, and from government and business in the form of transfers; from domestic sources as well as the rest of world. It does not include realized or unrealized capital gains or losses.

Essentially, the difference between personal income and consumption expenditures is the total of taxes paid, personal interest payments and transfer payments to governmental programs such as social security, and personal savings.

Total K-12 expenditures is all spending by Kansas school districts, including state, federal and local funding. Most of this revenue is from taxes, but a portion is personal payments, such as lunch fees and charges for student materials and transportation.