vermont state public education expenditure overview and analysis - initial review - originally...
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Vermont State Public EducationVermont State Public EducationExpenditure Overview and AnalysisExpenditure Overview and Analysis
- Initial Review - - Initial Review -
Originally Prepared for the Vermont Business Roundtable andOriginally Prepared for the Vermont Business Roundtable andLake Champlain Regional Chamber of Commerce, Lake Champlain Regional Chamber of Commerce,
Presented at the Request of the Vermont Joint Fiscal OfficePresented at the Request of the Vermont Joint Fiscal Office
Thomas E. Kavet, PresidentThomas E. Kavet, President Dr. Nicolas O. Rockler, CEODr. Nicolas O. Rockler, CEO
Kavet, Rockler & Associates, LLCKavet, Rockler & Associates, LLC Economic and Public Policy ConsultingEconomic and Public Policy Consulting
985 Grandview Road985 Grandview RoadWilliamstown, Vermont 05679-9003 USAWilliamstown, Vermont 05679-9003 USATelephone: 802-433-1360Telephone: 802-433-1360Facsimile: 866-433-1360Facsimile: 866-433-1360Cellular: 802-272-8385Cellular: 802-272-8385Website: www.kavetrockler.comWebsite: www.kavetrockler.comE-Mail: E-Mail: [email protected]@columbia.edu
Public K-12 Education is the Largest Single Public K-12 Education is the Largest Single State Expenditure, Representing Nearly State Expenditure, Representing Nearly
Half of All State Government AppropriationsHalf of All State Government AppropriationsFY2007 Vermont State Appropriations
All Funds, Source: State of Vermont, J oint Fiscal Office
All Other13%
Transportation7%
Debt Service2%
Human Services22%
Corrections4%
Higher E ducation3%
K-12 E ducation49%
Primary FindingsPrimary Findings The largest education expenditure components are related to The largest education expenditure components are related to
personnel staffing, with more than two-thirds of all personnel staffing, with more than two-thirds of all expenditures going to salaries and benefitsexpenditures going to salaries and benefits
Benefit costs, especially healthcare, have been rising rapidly Benefit costs, especially healthcare, have been rising rapidly and now represent more than 22% of all personnel costsand now represent more than 22% of all personnel costs
Over the past 10 years, total expenditures have been rising at Over the past 10 years, total expenditures have been rising at rates that are more than double general inflation rates as rates that are more than double general inflation rates as measured by the Consumer Price index and are likely to measured by the Consumer Price index and are likely to continue to do so without policy interventioncontinue to do so without policy intervention
Enrollments have declined by nearly 10,000 students since Enrollments have declined by nearly 10,000 students since
1997 and will continue to decline through about 2013. At no 1997 and will continue to decline through about 2013. At no time over the next 20 years are enrollments expected to time over the next 20 years are enrollments expected to exceed current levelsexceed current levels
Since 1996, staffing has increased by more than 22%.Since 1996, staffing has increased by more than 22%. Further research is required to more fully understand all of the Further research is required to more fully understand all of the
factors affecting past and likely future expenditure growth factors affecting past and likely future expenditure growth
Enrollments Will Continue to FallEnrollments Will Continue to Fall Figure 2: Vermont Public School Enrollments
88,000
90,000
92,000
94,000
96,000
98,000
100,000
102,000
104,000
106,000
108,000
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
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88
19
89
19
90
19
91
19
92
19
93
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94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
Sources: Vermont DOE and Consensus Administration and Joint Fiscal Office Projections - May 2006
……While Expenditures are Growing RapidlyWhile Expenditures are Growing RapidlyFigure 3: Vermont Total Educational Expenditures, 1992-2005
(Source: Vermont Department of Education)
0.6
0.7
0.8
0.9
1.0
1.1
1.2
1.3
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
$ B
illi
on
s
Change in Total Expenditures vs. CPIChange in Total Expenditures vs. CPIFigure 4: Educational Expenditures versus CPI
(Sources: U.S. Bureau of Labor Statistics, VT Department of Education)
-2
0
2
4
6
8
10
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
An
nu
al P
erc
en
tag
e C
ha
ng
e v
s. Y
ea
r A
go
Education Expenditures
Consumer Price Index
Simple Arithmetic:Simple Arithmetic:Rising Expenditures + Falling Enrollments Rising Expenditures + Falling Enrollments
= Higher Per Pupil Expenditures= Higher Per Pupil ExpendituresFigure 12: Expenditures per Pupil, 1992-2005
(Sources: Vermont Department of Education and Joint Fiscal Office)
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
14.0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Exp
en
dit
ure
s p
er
Pu
pil
($000)
Data Sources and Expenditure Data Sources and Expenditure Growth AnalysisGrowth Analysis
Data Sources, Expenditure Database Data Sources, Expenditure Database Development and ProcessesDevelopment and Processes
Expenditure CategoriesExpenditure Categories - Salaries- Salaries - Benefits- Benefits - Purchased Services- Purchased Services - Transportation- Transportation - Capital Expenditures- Capital Expenditures
Salaries and BenefitsSalaries and BenefitsFigure 5: Personnel Expenditures on Salaries and Benefit, 1992-2005
(Source: Vermont Department of Education)
0
100
200
300
400
500
600
700
800
900
1,000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Mill
ion
s o
f D
olla
rs
Salaries Benefits
Benefits are Increasing as a Share of Benefits are Increasing as a Share of Personnel CostsPersonnel Costs
Figure 13: Benefits Share of Personnel Expenditures and Healthcare CPI, 1992-2005
170
190
210
230
250
270
290
310
330
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
CP
I-H
ea
lth
ca
re
(In
de
xe
d t
o 1
98
2-1
98
4=
10
0)
16
17
18
19
20
21
22
23
Be
ne
fits a
s %
of P
ers
on
ne
l Co
sts
Benefits (% of Personnel Expenditures)
Price Index - Health Care
Top 10 Expenditures by ObjectTop 10 Expenditures by Object(Annual Growth Rate 1995-2005)(Annual Growth Rate 1995-2005)
Personnel-Salaries (4.8%)Personnel-Salaries (4.8%)
Personnel-Benefits (8.0%)Personnel-Benefits (8.0%)
Purchased Prof. Services-not from other SU’s or LEA’s Purchased Prof. Services-not from other SU’s or LEA’s (7.3%)(7.3%)
Other Purchased Services-Tuition Paid to Private Other Purchased Services-Tuition Paid to Private Schools (14.3%)Schools (14.3%)
Supplies & Materials-not Books (1.3%)Supplies & Materials-not Books (1.3%)
Purchased Services-Construction (5.0%)Purchased Services-Construction (5.0%)
Non Construction Property Services (5.2%)Non Construction Property Services (5.2%)
Other Uses-Bond Retirement (8.2%)Other Uses-Bond Retirement (8.2%)
Other Purchased Services (6.7%)Other Purchased Services (6.7%)
Student Transportation Paid to Non-School Student Transportation Paid to Non-School Providers (7.4%)Providers (7.4%)
These 10 categories account for more thanThese 10 categories account for more than93% of Total Expenditures93% of Total Expenditures
Top 10 Expenditures by ObjectTop 10 Expenditures by Objectcont.cont.
(Annual Growth Rate 1995-2005)(Annual Growth Rate 1995-2005)
Except for Benefits, The Composition of Except for Benefits, The Composition of Expenditures Has Not Changed MuchExpenditures Has Not Changed Much
1995
2005
Figure 6: 1995 Expenditures by Object
Property2%
Supplies and Materials6%
Other Objects2%
Other Uses of Funds2%
Other Purchased Services7%
Purchased Prof. & Tech. Services
7%
Personnel Svcs.-Emp. Benefits 9%
Purchased Property Services5%
Personnel Svcs.-Salaries59%
Figure 8: 2005 Expenditures by Object
Personnel Svcs.-Salaries54%
Other Uses of Funds2%
Property2%
Other Objects2%
Supplies and Materials6%
Other Purchased Services9%
Personnel Svcs.-Emp. Bene.15%
Purchased Prof. & Tech. Svcs.5%
Purchased Property Services5%
Nor Has It Changed Much by FunctionNor Has It Changed Much by Function
1995
2005
Figure 9: 1995 Expenditures by Function
Facility Acquisition and Construction
5%
Other Expenditures3%
Non-Instructional Services<1%
Support Services32%
Direct Instruction60%
Figure 11: 2005 Expenditures by Function
Non-Instructional Services3%
Facility Acquisition and Construction
3%
Other Expenditures3%
Direct Instruction59%
Support Services32%
Staff GrowthStaff Growth
Overall staff grew 22.2% from 1996-2006, Overall staff grew 22.2% from 1996-2006, about 2.0% per yearabout 2.0% per year
Instructional staff grew 22.8% from 1996-Instructional staff grew 22.8% from 1996-2006, about 2.1% per year2006, about 2.1% per year
Support services for students grew 42.9% Support services for students grew 42.9% over this same period, 3.6% per yearover this same period, 3.6% per year
Only Transportation, Food Service and Only Transportation, Food Service and General Administration declined (…besides General Administration declined (…besides the number of students) the number of students)
Compared to Other States...Compared to Other States...
Vermont was #1 in 2000 in Pupil/Teacher Vermont was #1 in 2000 in Pupil/Teacher RatioRatio
Vermont was #8 in 1999 Expenditures per Vermont was #8 in 1999 Expenditures per PupilPupil
Vermont was #30 in 2001 Average Salary Vermont was #30 in 2001 Average Salary per Teacher, and was 87% of the U.S. per Teacher, and was 87% of the U.S. average average
Vermont was #45 in teacher salary growth Vermont was #45 in teacher salary growth between 1993 and 2003 between 1993 and 2003
Future Cost Pressures Will EscalateFuture Cost Pressures Will EscalateCost Pressures Will Escalate
(Implicit State and Local Government Deflator, Percent Change vs. Year Ago)
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
5.5%
6.0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: U.S. Department of Commerce, Vermont Joint Fical Office and Administration Consensus Forecasts
Per
cen
t C
han
ge
vs. Y
ear
Ag
o
……At the Same Time Declining Real Estate At the Same Time Declining Real Estate Markets Will Stress the Revenue Tax Base Markets Will Stress the Revenue Tax Base
Annual Growth Rate - Vermont Real Adjusted* Equalized Education Grand List (*excluding Utilities, Cable, Exemptions and Contracts, and including Current Use Exempt Value)
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
19
64
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65
19
66
19
67
19
68
19
69
19
70
19
71
19
72
19
73
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76
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79
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80
19
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19
96
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19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
Source: Vermont Joint Fiscal Office and Administration Consensus Forecast, May 2006
Pe
rce
nt
Ch
an
ge
fro
m Y
ea
r-A
go
As the Single Largest State and Local As the Single Largest State and Local Government Expenditure Item, Government Expenditure Item,
Are there ways we can increase the efficiency and Are there ways we can increase the efficiency and effectiveness of the public educational services effectiveness of the public educational services we deliver?we deliver?
Are we “getting our money’s worth” for our Are we “getting our money’s worth” for our relatively high state and local education relatively high state and local education expenditures?expenditures?
Why are staffing levels increasing as enrollments Why are staffing levels increasing as enrollments decline? Will this continue?decline? Will this continue?
Are there structural conditions that affect Are there structural conditions that affect expenditure management and control? expenditure management and control?
Further ResearchFurther Research
Further research should be publicly fundedFurther research should be publicly funded
Further Data Analysis: By geographic region, Further Data Analysis: By geographic region, organizational level, expense categoryorganizational level, expense category
Meetings and interviews with Department of Meetings and interviews with Department of Education and other management staff (business Education and other management staff (business managers, superintendents, teachers, union staff, managers, superintendents, teachers, union staff, etc.)etc.)
Outcome variance review and analysisOutcome variance review and analysis
Greater analytic depth, based on the aboveGreater analytic depth, based on the above
Identification of possible policy options and goalsIdentification of possible policy options and goals
For Further Information, ContactFor Further Information, ContactThe Legislative Joint Fiscal Office or:The Legislative Joint Fiscal Office or:
Dr. Nicolas O. Rockler, CEODr. Nicolas O. Rockler, CEO Thomas E. Kavet, PresidentThomas E. Kavet, President
Kavet, Rockler & Associates, LLCKavet, Rockler & Associates, LLC Economic and Public Policy ConsultingEconomic and Public Policy Consulting
985 Grandview Road985 Grandview RoadWilliamstown, Vermont 05679-9003 USAWilliamstown, Vermont 05679-9003 USATelephone: 802-433-1360Telephone: 802-433-1360Facsimile: 866-433-1360Facsimile: 866-433-1360Cellular: 802-272-8385Cellular: 802-272-8385Website: www.kavetrockler.comWebsite: www.kavetrockler.comE-Mail: E-Mail: [email protected]@columbia.edu