The truth about NC education spending

By: - July 21, 2016 12:30 pm

Numbers-math421Fact check shows Pope-Civitas Institute used backwards math to tell false story on public schools budgets

A recent post from Bob Luebke at the right-wing Pope-Civitas Institute incorrectly argues that spending on public schools has increased since Republicans took control of the North Carolina General Assembly. The post makes the absurd claim that the budget for public schools has increased in both overall and per-pupil spending, even when adjusted for inflation. There is one big problem with this analysis, however: Bob Luebke doesn’t understand how inflation works.

As most folks understand, prices for goods and services rise over time. Due to inflation, a dollar in 2016 buys you less than a dollar in 2005. Or to put it another way that almost every person reading this already understands, a person who earned $50,000 in 2005 is not better off if he is still earning $50,000 in 2016. While that’s a simple concept that most of us understand intuitively, it is apparently disputed by the free-market experts at Civitas.

Looking at the Consumer Price Index – the same measure of inflation used by Civitas in their analysis – inflation has risen 22% since 2005. Returning to the example of the person earning $50,000 in 2005, the figure needs to be increased by 22% to make comparisons to salaries in 2016.  The same holds true when making comparisons of historical budget figures. If North Carolina spent $6.9 billion on public schools in FY 05-06, that figure needs to be increased by 22% to compare it to a dollar in 2016. That is, $6.9 billion in FY 05-06 is the equivalent of $8.4 billion today.

The Civitas analysis, however, does the opposite. Failing to understand that inflation means that things get more expensive over time, not less, they mistakenly decrease prior year budget figures in their attempt to adjust for inflation. In doing the math incorrectly, they obviously reach conclusions about the history of public school funding that are laughably wrong. Claiming that their “facts destroy myths,” they pretend that funding for public schools has actually increased over time on both an overall and per-student basis.  Based on their backwards math, they accuse Democrats and liberals who have complained of shrinking public schools budgets of being “flat wrong.”

Obviously, the only folks who are “flat wrong” are the folks at Civitas. When adjusted for inflation, public schools budgets are still well below the levels seen in FY 08-09 and FY 09-10:

Inflation Adjusted

When you properly adjust for inflation, you can see that public school budgets still have not reached levels seen before the Great Recession.

Of course, the story for Republicans gets uglier when you look at per-student funding.  North Carolina’s student population has been growing over the past ten years. Recent budgets – when properly adjusted for inflation – have barely kept pace, and are far below pre-Recession levels:

Inflation Adjusted-2

You have to look as far back as FY 96-97 to find the first pre-Recession year when inflation adjusted per-student funding was less than what is being provided in FY 16-17. Of course, much less was asked of our schools back then.  For example, in FY 96-97, North Carolina schools taught far fewer English Language Learners and students in poverty.

Realistically, adjusting for inflation still fails to tell the whole story. The rate of inflation faced by public schools is actually higher than the rate of inflation reflected by the Consumer Price Index. Industries, such as education that rely on skilled workers (i.e., teachers) do not benefit as much from technological advances that bring down costs in other industries (a phenomenon economists refer to as Baumol’s Cost Disease). Kerry Crutchfield, the former budget director for the Winston-Salem/Forsyth County Schools, explains what it looks like in practice, detailing how the increased cost of mandatory employee benefits eats away at public school budgets.

Regardless, it’s clear that recent budgets for North Carolina’s public schools are nothing to brag about. Contrary to what Civitas claims, budgets have indeed been slashed from pre-Recession levels. The Republican-led General Assembly has chosen to provide tax cuts for the rich, rather than restoring funding to public schools. Those are facts. Of course, understanding those facts is a lot easier when you know how to do math.

Kris Nordstrom is an Education Policy and Finance Consultant who works with the North Carolina Justice Center’s Education and Law Project.

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Kris Nordstrom
Kris Nordstrom

Kris Nordstrom is a Senior Policy Analyst with the North Carolina Justice Center's Education & Law Project. He previously spent nine years with the North Carolina General Assembly’s nonpartisan Fiscal Research Division.