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Economic Tidbits

Trends in K-12 School Spending

The need for greater control of local spending has been mentioned repeatedly during tax reform discussions over the past few years. School spending, because schools account for roughly 60 percent of the property taxes levied, are often a focus of the spending control discussions. This week, Tidbits delves into trends and the history of school spending since school year 1996-97.

Figure 1 shows actual (blue) and inflation-adjusted (yellow) K-12 general fund disbursements from school years 1996-97 to 2016-17. The data comes from the Historical and Current Nebraska K-12 School Data report, released by Legislative Fiscal Office in August 2018. Actual spending data was adjusted by the Bureau of Labor Statistics, CPI-Urban Index for the Midwest Region to derive inflation-adjusted, or real spending figures.

Total general fund disbursements in school year 1996-97 equaled $1.602 billion and rose to $3.693 billion by school year 2016-17. The average annual percentage increase over the 21-year period was 4.3 percent. The rate spending growth, though, slowed in the latter part of the period. The Legislative Fiscal Office reported the average spending growth from school year 2006-07 to 2016-17 was 3.5 percent compared to 5.0 percent in the prior decade. During the last decade, average spending growth in construction, 7.5 percent, more than doubled spending on operations, 3.5 percent. In inflation-adjusted dollars, annual spending growth over the period averaged 2.3 percent. Total disbursements in school year 2016-17 in real terms were 56 percent greater than that spent in 1996-97.

Figure 1. K-12 Total General Fund Disbursements, Actual & Inflation-Adjusted, Million $

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Source: Historical and Current with Nebraska K-12 School Data, Legislative Fiscal Office, August 2018; Chart created Flourish

School disbursement consists of spending on regular instruction, special education, administrative, and other spending categories, all of which grow at different rates. To get a sense of which spending categories are growing faster relative to others, growth in inflation-adjusted spending in the different categories is compared in Figure 2. Annual growth in spending for regular instruction and administrative and business costs averaged 2.0 percent. Disbursements on special education increased by an average of 3.3 percent over the period. Real spending on regular instruction declined in 3 of the 21 years examined while the only decline in real spending on special education came in school year 2004-05, when it declined 8.5 percent.

Figure 2. Inflation-Adjusted Disbursements on Regular & Special Education Instruction and Administration, Million $

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Source: Historical and Current Nebraska K-12 School Data, Legislative Fiscal Office, August 2018; Chart created with Flourish

This look at spending does not account for changing laws, different levels of state aid over time, changes in curriculum or course offerings, staffing levels, and various other factors which can influence school spending. It simply takes a high-level look at disbursements over time. For a more detailed analysis, the Legislative Fiscal Office Report can be found at: https://nebraskalegislature.gov/pdf/reports/fiscal/k-12_school_data-2018.pdf

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