Economist Mike Ferguson Questions Whether Idaho Is Adequately Funding Education

Molly Messick / StateImpact Idaho

Mike Ferguson is the Director of the Idaho Center for Fiscal Policy.

The Idaho Center for Fiscal Policy released a report last week questioning the constitutionality of Idaho’s education funding system.  Director of the center and former longtime chief state economist Mike Ferguson authored the report.  Two of the largest stakeholders involved, the Idaho Department of Education and the Idaho Education Association have yet to weigh in beyond an initial reaction statement. 

We recently sat down with Ferguson to talk about the report, his findings and where he thinks the state should go from here. 

Q: Why did you decide to work on this report?

A: My intent going in was to look at the changes that had occurred in education funding since the great recession.  In particular, I was aware that there had been a pretty big increase in the use of supplemental override levies.  I also was aware that in 2006, property tax funding was swapped for sales tax funding.  That’s not a problem in and of itself, but what it did was leave only unequalized levies for doing these supplementals.

The other part that I guess really surprised me was the degree to which the funding effort declined.  That’s the change since 2000.  Over the 1980s and 90s, education funding fluctuated, but it was pretty stable, at about 4.5 percent of the state’s personal income.  The degree to which it dropped, the steadiness it dropped, just surprised me.

And then you look at that in the context of the increased use of supplementals and school districts are saying ‘we have to do this in order to meet our basic educational needs.’  Well, then a light bulb went off and I thought, wait a minute, the constitution says it’s the duty of the legislature to provide a general, uniform and thorough system of common schools, or what we call public schools.

Q: You measured the funding changes in a couple of ways, one was through personal income.  Why do you measure it that way?

A: Well, I did that because personal income is probably the single best reflection of the fiscal capacity of the state.  It’s the aggregate of income of all Idahoans.  Since it measures money income, it measures, the kind of money available to do things, including fund an educational system.

Q: As the recession hit, available money goes down – I would imagine?

A: The beauty of using personal income is personal income will fluctuate as the economy does.  As the economy grows, personal income will go up, if the economy contracts, personal income will go down.  It basically can provide you a year-by-year indication of what that funding capacity is.  And it will have ups and downs along with the economy, so it sort of takes out that cyclical volatility as well as the trend.

Q: You also measure education funding as a share of the total state budget.  One of the biggest increases in the total share of state funding has been Medicaid and health and human services…

A: I, by no means, want to diminish the importance of funding health services for people who don’t have any other means of obtaining health care.  The Medicaid program is for people with severe disabilities, low income, children, and pregnant women – there are limits.  It is an expensive program, health care in this country is expensive.  That’s driven by national factors. It’s a separate issue.

The reason I brought it into the report, is given that the share of funding within the entire state budget had fallen, along with this effort relative to the state’s personal income, I had to ask myself why.  There are really two factors. There is the shift in funding toward health and there was the reductions in the state’s fiscal capacity, i.e. tax cuts that began in 2000.  I really don’t want people to think this should be an education vs. Medicaid kind of issue. That’s a separate issue. It should be treated as a separate matter. But, education is kind of a special case, in that education is enshrined in Idaho’s Constitution.

Q: Can it provide an accurate picture, to look at a share of education as a share of Idaho’s entire budget, because of those changes…

A: That’s why I came back to the point that when we look at education funding as a share of our personal income, it’s clear that we’ve reduced our effort.  There are really two important points that come out of the report. One is there has been this pretty dramatic decrease in the level of funding education. The other is the way we are funding it, and the trend there, is toward a very inequitable manner, which relies increasingly on unequalized property taxes.

Q: Your report also points out school districts have had to rely more on levies for funding.  What is the concern with doing that?

A: If you look at it on a statewide basis, just looking at the capacity to fund education with property taxes, I tried to keep it simple. So I looked at the funding capacity per student.  The poorest district in that sense is Snake River with I think about $153,000 per student. So a levy of one-tenth of a percent would raise $153 per student.  The richest district in the state at over $10 million per student is Avery, but they only have 18 students.  The next richest district is the McCall-Donnelly district with a little over $4.5 million per student. So their levy of one-tenth of a percent raises $4,600 per student.  So, the capacity of a district is vastly different across the state.

Generally speaking, if you have districts with similar characteristics, for example in the Snake River plain where there is a lot of agriculture, and typically a fairly large number of students, you may end up with a cluster of property-poor districts.  There can be differences in adjoining districts.  But, it’s not just the property value and the capacity. It’s also the willingness of the patrons of an individual school district to tax themselves through the property tax to fund education.

Now, the constitution doesn’t put that duty on the parents, or the voters or the school trustees. It puts it squarely on the shoulders of the Legislature.  And it talks about the state shall have a uniform and thorough system of free common schools, or public education.  So there’s a lot of moving parts. So the basic situation is pretty clear when you put the data together and you take a look at it.

We are diminishing our effort level in terms of funding public schools.  Public schools are responding because they do have via legislation, the authority to do supplemental override levies. They are using that to an increasing degree and that brings out the very vast differences in the capacity and the willingness among school districts.

Q: One lawmaker, Senate Education Chairman John Goedde (R-Coeur d’Alene) told the Spokesman Review the current system works.  “I think the state has an obligation to fund some equitable level of public school education, and I think it’s the option of the local taxpayers to fund anything over that level if it’s their desire.”

A: Well, far be it from me to say what ‘uniform’ and ‘thorough’ mean.  But I guess I would question, based on the facts and based on these vast funding disparities, and the fact that a lot of districts going forward with these levies are saying ‘we don’t have the resources to do the basic things we need in terms of our educational system.’ To me that is prima fascie evidence that maybe the state is not actually providing this baseline.

Q: Is the state meeting its constitutional duty?

A: I don’t know.  I’m simply providing information, putting it out in terms, I hope, is relatively easy to understand.  Putting those constitutional provisions, not just in relation to the requirement to fund a uniform and thorough system of education, but also in regard to the property tax system.  Up until 2006, the state did use property taxes as a major component of education funding, but there was a really key difference between now and then.  Then, it was equalized, meaning that a three-tenths of a percent levy really didn’t stay in the district.  The district basically made that levy. It was treated in a way of putting in a pot with the general fund and endowment funds and so forth, and that money was spread out among the school districts.  It’s a little more complicated than that, but that’s a fair representation of what was happening then.

I didn’t go out and do a study. I simply collected data that documents what the state has spent for its public education system.  And when you break it down and look at the information, it does raise questions.  It raises doubts in my mind as to whether the state is fulfilling its duty both from the standpoint of a thorough education system and from a uniform education system.

Q: And then you get into defining adequate and thorough, and potential disagreements with defining those words.

A: Correct.  That’s in the eye of the beholder I suppose.  The state did a study in 2009, the Office of Performance Evaluations, they went into great detail.  They specifically recommended the state not conduct a formal adequacy study because it would probably bring on lawsuits.  I’m not sure I would agree that’s a good reason not to examine something that’s so important and enshrined in the constitution.  I have great admiration for the founders who put those words in there – I mean, it’s one sentence – and it’s very forward thinking.

Q: In response to your study, a written statement from the Idaho Department of Education department said, “Because of Students Come First, we are now on a clear path to creating an education system that meets our constitutional responsibility of a uniform system of public schools and provides equal access and opportunities to all students – no matter where they live.”  How would you respond?

A: I know there are other quotes out there that just throwing money at education doesn’t guarantee a good educational system.  I certainly wouldn’t dispute that.  But if you look at the facts, Idaho has one of the lowest levels of funding for education in the nation.

And, I guess its like squeezing blood out of turnip. It’s not going to happen.  You do have to devote resources.  Now, you can misappropriate resources, you can screw that up.  But I don’t buy into the notion that you can somehow obtain a quality education system without devoting resources to it.  If you look at the rankings Idaho has, we tend to be in the middle or bottom half when you look at national education rankings.  Is that adequate? Is that sufficient? Is that the standard we set for ourselves?  Or do we want to promote the utmost in excellence and devote the resources necessary to achieve that.

This interview has been edited and shortened.  You can find Mike Ferguson’s report on education funding from 1980-2013 here.