Census Bureau FY 2008 Education Finance Data

The U.S. Census Bureau has released elementary and secondary school finance data for fiscal year 2008, and I have once again come up with a couple of spreadsheets that I will write about in the next two posts. Attached to this post is a spreadsheet with data for the year for New York City, Downstate New York, Upstate New York, New Jersey, Massachusetts and the U.S., plus all school districts within New York State. The data includes revenues by source (federal, state and local), and spending by category (instructional vs. non-instructional, wages, benefits and other, interest and debts), all expressed per student. In high-wage high-cost areas – New York City, the Downstate Suburbs, New Jersey and Massachusetts – an adjustment is made for this.

Without that adjustment, just using the data as provided by the Census Bureau, one group has found that NY State’s public school spending per student is the highest in the United States. But even with an adjustment, school spending was sky high in New York State in FY 2008, even in New York City where it had historically been low. That year, total public school expenditures averaged $12,279 per child in the U.S. and $16,842 in Upstate New York, compared with an adjusted figure of $15,840 in New York City, $16,171 in the Downstate Suburbs, $15,616 in New Jersey, and $12,369 in Massachusetts. Take out the need for Massachusetts to pay its public school employees more to compete in a more expensive labor and housing market, in other words, and that state matched the U.S. average almost exactly, whereas New York and New Jersey were much higher. The unadjusted figures are $21,085 per student in New York City, $21,526 in the Downstate Suburbs, $18,637 in New Jersey, and $14,801 in Massachusetts. That New York City’s public school spending per child nearly matched the Downstate Suburbs and exceeded New Jersey is a stunning development, but the sky-high total is also stunning, and was probably affordable only due to a debt-fueled financial boom that started to collapse in August 2007, just before the kids headed to school in the fiscal year covered by this data.

My workover of the data is as follows. First I downloaded the most detailed data the bureau provides for every school district in the country. Then I crunched it down the number of categories and school districts included to a more manageable size, creating totals for the U.S., the states and parts of New York State by addition. The Downstate Suburbs, as here described, are those New York State counties in the New York Core Based Statistical Area (metro area): Nassau, Suffolk, Westchester, Rockland, Putnam. The individual New York State school districts are sorted by CBSA number followed by county number, and since these tend to be alphabetical, school districts in the Albany-Schenectday-Troy CBSA in Albany County are listed first. The spreadsheet has a “window,” “freeze pane” line added to make it easy to pan across the revenue and spending categories and down the list of school districts, while keeping the headings and totals on the screen. To convert to per student expenditures in a reasonable way, I excluded spending on charter schools, adult education, and other non-school expenses, since the data item on the number of students does not include those who benefit. Revenues for these services remain included in the revenues category. The Census Bureau does not as of yet tabulate detailed data on students in and spending categories for charter schools, which I suppose would have to be by county rather than school district or individual school if it is not to get out of hand. The totals by category in my spreadsheet often match those in the Census Bureau’s PDF report exactly, but also sometimes differ. But I have confirmed that my aggregated totals match the data download from the Bureau.

To adjust for the cost of living, I scaled down revenues and expenditures in New York City, the Downstate Suburbs, New Jersey and Massachusetts based on their average private sector earnings per worker, excluding the Finance and Insurance sector. That sector has a labor market (or economic conspiracy) separate and apart from the rest of us, and does not present a fair comparison – its pay has soared and collapsed in recent years. Earnings per worker in other parts of the private sector in Downstate New York is fairly stable at about 33 percent more than the U.S. average, give or take a few percent. In 2008, according to Local Area Personal Income data from the Bureau of Economic Analysis, it hit 33 percent above average almost exactly, so revenues and expenditures are scaled down for New York City and the Downstate Suburbs by multiplying by about .75.

As I wrote last month based on another data series, average (mean) private sector pay per employee in New York City plunged 9.1% from 2008 to 2009, driven by a 17.7% decrease in the Finance and Insurance sector, due to lower bonuses. Excluding both Finance and Insurance and Health Care and Social Assistance, a sector substantially financed by government, payroll per private sector worker fell 3.2% from 2008 to 2009 in New York City. But this figure presumably fell in the U.S. as well, so the ratio may not have changed.

Many of the findings on comparative school finance have been the same for many years. New York City is very low in per child non-instructional spending, and always has been – even back in the days of the notorious 110 Livingston Street, while other parts of New York State and New Jersey are and were high. Whereas in the past New York City’s non-instructional spending per child had been below the national average even without adjustment for the higher cost of living here, in FY 2008 it was below average only with adjustment. It remains much lower than other parts of New York State. Total non-instructional spending was $4,407 per child in the U.S., $3,301 in New York City (with adjustment), $5,142 in the Downstate Suburbs (with adjustment), $5,311 in Upstate New York, $5,848 in New Jersey (with adjustment).

Looking at specific non-instructional categories, and using adjusted data where relevant, New York City continues to be extremely low compared with the national average in spending on Pupil Support (attendance record keeping, social work, student accounting, counseling, student appraisal, record maintenance, placement services, medical, dental, nursing, psychological, and speech services.) My guess is this category of spending has been cut back severely in NYC since FY 2008. NYC is also extremely low in Instructional Staff Support (supervision of instruction service improvements, curriculum development, instructional staff training, and media, library, audiovisual, television, and computer-assisted instruction services). And it is extremely low in General Administration (board of education and executive administration (office of the superintendent) services). Per child spending in other parts of the state is high in these categories. For General Administration, for example, per child spending (adjusted where applicable) was $189 per student in the U.S., just $85 in NYC, $343 in the Downstate Suburbs, and $387 in Upstate New York.

New York City is below average, but closer to the U.S. average, in School Administration (office of the principal) and Food Services, and is somewhat above average in Operation and Maintenance of Plant with an adjusted $1,093 per student in NYC vs. $993 for the U.S. Spending is high in these categories elsewhere in New York State.

On the other hand, NYC spending on Student Transportation per student is much higher than the national average, even after adjustment for the cost of living, despite the higher share of the city’s children who live within walking distance, and despite an ongoing cutback, relative to inflation, in NYC funding for the MTA, which transports the largest share of the children. The private school buses, which account for most of the cost seen here, are a politically powerful and organized industry. They received $739 for every child in the NYC schools (I’d like to see how much they got per child actually transported), compared with a U.S. average of $450. The suburbs, Upstate New York and New Jersey were even higher.

What has changed over the years is New York City’s instructional spending. With adjustments where applied, FY 2008 instructional spending per student totaled $6,211 in the United States, $10,164 in New York City (64 percent higher!), $9,720 in the Downstate Suburbs, $9,525 in Upstate New York, $8,039 in New Jersey, and $6,940 in Massachusetts. New Jersey may be lower because they weren’t, and aren’t, putting any money in to the teacher pension funds, meaning either that state’s economy will be destroyed by soaring taxes or its school system destroyed by money diverted out of the classroom to the retired even sooner than in New York. Unless the pensions aren’t paid, due to something like bankruptcy. In any event because it is lower non-instructional spending, New York City’s instructional spending per spending was higher in FY 2008 than in other parts of the state.

In FY 2008, NYC’s instructional salaries per child remained lower than the rest of the state, but were well above the U.S. average even after adjustment for higher local wages/living costs, at $6,133 per student vs. $4,205. (The unadjusted total was $8,184 per student in New York City, meaning that for every 20 students the City of New York spent $163,680 on teacher pay.) The comparable figures, adjusted where applicable, were $6,742 in the Downstate Suburbs, $6,350 in Upstate New York, $5,291 in New Jersey, and $4,494 in Massachusetts.

What really sets New York City apart, however, is high spending on instructional employee benefits, such as health care for workers and retirees, and pension contributions. Adjusted spending in this category totaled $2,949 for New York City, more than double the $1,249 in the U.S., $2,441 in the Downstate Suburbs, $2,610 in Upstate New York, $1,086 in Massachusetts, and $1,171 in New Jersey, where they haven’t been funding their pensions. Since the cost of teacher pensions is set to explode, however, under newly passed New York State legislation school districts in the rest of the state will also not pay what they owe, like New Jersey. This will make pension costs explode even more in the future. In the end, this will probably result in New York City’s share of state school aid being cut instead. Most state legislators from New York City voted for the deal even though New York City’s teacher pension contributions, as a share of teacher salaries, is much higher.

As for other instructional spending, on things like books and teaching supplies, New York City was above average in FY 2008 after adjustment; it had been far below average in the past. Spending in the Downstate Suburbs and Upstate New York was below the U.S. average in FY 2008. This, as well, is a category of spending that has probably already been cut in NYC due to the recession. In fact, a recent news article claimed that the city’s spending on art supplies had fallen 68 percent from FY 2008 to the current budget.

In one quirk of the data, New York City’s total public school spending was higher than its public school revenues in FY 2008. This could be explained by NYC’s relatively high capital spending, paid for with borrowed money, as the city continued to try to make up for the absent maintenance and replacement of the past and a high school system scaled to accommodate a small share of the city’s children, on the assumption that the rest would drop out. New York City’s adjusted education debt per child is above the U.S. average, but not to the extent I would have feared, but this may be because not all the debt used to fix the schools has been counted. Surprisingly, the public school debts of the rest of the state are greater. On the other hand, New York City’s funding for charter schools is included in the revenues but not the expenditures.

In the rest of New York State, in contrast, revenues exceeded expenditures. While I don’t know why, I do know from news reports that many school districts elsewhere built up substantial reserves going into the recession, reserves that were later criticized by state legislators. Those who have read my posts in the past know I am no fan of the school districts in the rest of the state, given what the did to the city’s children through the school aid formula all those years. But in this case it is hard to fault them for preparing for a recession by setting aside money. One wishes that the state had done the same, instead of spending every dime and borrowing on top of it.

New York State’s local school taxes are very high. Even after adjustment, for example, they averaged $10,946 per student in the Downstate Suburbs, $6,974 in Upstate New York, and $6,652 in New York City, compared with a national average of $5,804. The unadjusted local tax revenue per student in the Downstate Suburbs, at $14,570, by itself far exceeded total average spending per child in the United States. And yet, New York’s average state aid per student was also well above the U.S. average in New York City and Upstate New York, and nearly matched it even in the affluent Downstate Suburbs. Without adjusting it downward for the local cost of living, in fact, average state aid in the Downstate Suburbs, at $6,911 per student, substantially exceeded the U.S. average of $5,804.

Comparing with schools elsewhere is one way to look at this data. Another is to imagine what could be done with the same amount or money, or somewhat less money, looking at the actual (unadjusted) data.

Imagine you were designing a school system from scratch, with a need to pay not only salaries but also retirement benefits, for those teaching not only regular students but also disabled students. I speak particularly to NYC teachers here, if any are reading. Do you think you could come up with something better than the NYC school system for $21,085 per student? That’s an average of $421,700 for every class of 20! That’s an average of $253,020 for a class of twelve! Let’s leave aside non-instructional spending, because supervision would be required separately in such system, and just consider instructional spending – teacher wages, benefits and supplies. Could you imagine a better system, starting over, for $13,529 per child? That’s $270,580 per class of 20, and $162,350 per class of 12. That’s what New Yorkers are paying teachers. The fact that teachers don’t take home nearly that much, and class sizes are not that small, because teachers spend more time out of the classroom and more years in retirement than other workers, is not our choice. It is a “win for children” as defined by the teacher’s union.

In remains to be seen (the Bureau says the revised FY 2007 Census of Governments data will be out later in July) if New York City finally equaled or exceeded the national average in public school spending when measured as a share of the personal income of its residents. Back in the 1990s, if New York City had been a separate state it would have been among lowest in the nation in school spending (despite being highest in state and local taxes as a share of its residents’ income) while the rest of the state was at the top. See the second attached spreadsheet for this data for FY 1997 and FY 2002, and be advised that for those of my children’s generation, give or take five years, the situation present in that spreadsheet is what matters, not what has happened since or what will happen next.

Based on the Bureau’s FY 2008 PDF report of the data cited here (go to the website linked in the first paragraph of this post, open the PDF and see Table 12) New York State as a whole was fourth among states in current spending as a percent of personal income in FY 2008, behind New Jersey and ahead of West Virginia. Given that the rest of the state has been off the charts in recent years, NYC must still be pulling the average down, but we will see.

And what has happened since FY 2008? We’ll have to wait a few years to find out what money will be spent elsewhere in the country in FY 2011. But based on the Mayor’s Budget Summary documents, under an executive budget that was mostly left intact by the City Council, New York City expects to spend $22.6 billion in FY 2011. In FY 2008, according to the city’s Budget Summary, it spent $20,13 billion. So after three years of “cuts,” the city is spending 12.3 percent more than it did in a year when spending was sky-high compared with the national average, even after making adjustments for the cost of living here. And as the relatively large “baby boom echo” generation continues to exit the schools, enrollment has been falling rather than rising.

The next post and spreadsheet will make two comparisons over time, between FY2008 and the year before, showing what happened as the Campaign for Fiscal Equity lawsuit was settled by then-Governor Spitzer, and between FY 2008 and FY2002, the last budget before the Bloomberg Administration.