PRESS RELEASE
April 27, 2006

Contact: Stephen Kroes, Executive Director
(801) 355-1400, ext. 5
(801) 573-8824 (mobile)
steve@utahfoundation.org

Printable Version

UTAH’S PUBLIC EDUCATION FUNDING EFFORT IN LONG-TERM DECLINE

Today, Utah Foundation released a research report on public education funding in Utah. The report, entitled “Paradox Lost: Utah’s Public Education Funding Effort No Longer Surpasses the Nation” is attached to this release. If the attachment did not transmit, it is available at www.utahfoundation.org. This report goes beyond the typical comparison of states’ in per-pupil funding and examines “funding effort” – a measure of the tax burden states impose specifically for public education.

Despite placing last in the nation in per-pupil funding for many years, Utah has historically been one of the highest states in funding effort, even ranking fifth highest among all the states in 1995. Utah Foundation has written about this phenomenon in the past, calling it “Utah’s education paradox.” This report finds that the paradox no longer exists, as education funding has fallen behind economic growth for more than a decade.

The decline in funding effort was the result of several major changes in tax and budgeting policy in the 1990s. First, in response to legitimate concerns about growing property taxes, the Legislature more than doubled the property tax exemption for homeowners and cut a statewide property tax rate for schools in half.

These changes dramatically reduced property tax funding for Utah schools, but the tax cuts were absorbed fairly well in school budgets, because the income tax was growing fast enough to make up the revenue. However, voters approved a constitutional amendment in 1996 to allow colleges and universities to receive some of the income tax, which had been solely used for public K-12 education before that time. Once the Legislature began transferring income tax revenues to higher education, the funding effort for public schools began an immediate and sustained decline.

Allowing higher education to receive income tax funding did not significantly improve funding for Utah colleges, because state general fund dollars were reduced to directly offset the infusion of income tax dollars. This “freeing up” of general fund money allowed other programs to grow, especially health, human services, prisons, and transportation projects.

Stephen Kroes, executive director of Utah Foundation said, “The transfer of income tax funds away from public schools was really a transfer to health, welfare, prisons, and transportation spending. That may have been acceptable at a time when Utah’s school population was not growing, but today’s rapidly growing student population calls for a fresh evaluation of state spending priorities.”

The report finds that if Utah’s funding effort for public education had been maintained at 1995 levels, schools would have had $600 million more in 2004. That would have provided an additional $1,200 per pupil, and Utah would no longer have placed last in the nation in education funding.

In the coming months, Utah Foundation will call on policymakers, school officials, interest groups, and the public to provide input and suggestions on ways to increase Utah’s education funding effort. The Foundation expects to then make recommendations this fall for reforms to Utah’s education finance system.

Stephen Kroes added, “At this point, Utah Foundation does not think a tax increase is needed to boost Utah’s funding effort, especially when the current tax system is producing large surpluses. But we would like to consider a range of options to bring Utah’s funding effort closer to what it was ten years ago. A healthy education system will be a key to keeping Utah’s economy running well.”

The research report is available free to the public on our website at www.utahfoundation.org.

Utah Foundation is a public policy research group that promotes a thriving economy, a well-prepared workforce, and a high quality of life for Utahns through research and practical, well-reasoned recommendations for policy change.