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State Raised School Spending
By John Hood

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Sep. 17th, 2014

RALEIGH ó Just before Labor Day, the publicly available polls of likely voters had incumbent U.S. Sen. Kay Hagan roughly tied with her Republican challenger, Thom Tillis. Since Labor Day, the polling average has shifted about three points in Haganís direction.

How come? The main cause, it seems, is that Hagan and her allies have vastly outspent Tillis and his allies on TV ads since Labor Day ó and the claims in those ads, on education funding, have both pulled some swing voters into Haganís column and pushed some Tillis voters into the undecided column.

I still think itís too early to predict the outcome of this volatile race with any confidence. But itís not to early to evaluate the widespread allegation by Hagan and allied groups that the North Carolina legislature cut education spending $500 million while Tillis was Speaker of the House.

Nonpartisan fact checkers have already judged the $500 million claim to be false or misleading. But even they havenít fully explained just how far off the mark Haganís allegation is, because they tend to focus only on the first three years of education budgets rather than the full trend under Tillis, which includes the 2014-15 fiscal year weíve now entered.

To evaluate the claim, we need four pieces of information: 1) total state spending on K-12 public schools in 2010-11, the last year in which the state legislature was in Democratic hands; 2) total state spending on K-12 public schools in 2014-15; 3) a measure of student enrollment; and 4) a measure of inflation.

Itís not as easy as you might think to pull these four statistics. While we know for certain how much the state of North Carolina spent on public schools in 2010-11, we obviously canít know that for the current school year until sometime in 2015. What we do know is what the state plans to spend this year. To compare apples-to-apples, then, we have to compare the enacted budget for 2014-15 to the enacted budget for 2010-11.

Similarly, while we know how many students ended up attending public schools in past years, we have only a projected enrollment figure for the current school year. On average, actual enrollment has been lower than projected since the beginning of the Great Recession. Consistency requires that we use the same yardstick over time, projected enrollment.

Finally, there is more than one measure of inflation. Should we use the Consumer Price Index? While its use is standard practice for adjusting household income and the like, it doesnít work as well for institutional trends. Many economists prefer to use the gross domestic product deflator, which captures a broader set of producer as well as consumer prices.

When my John Locke Foundation colleagues pulled all these statistics together, hereís what they found:

ē Total state spending on K-12 education is projected at $8.6 billion for 2014-15, up from $7.53 billion in 2010-11. Thatís an increase over four years of more than $1 billion, or 14 percent. It followed a two-year drop in state school spending of nearly $800 million, or 9 percent, under the previous Democratic legislature.

ē Thatís not the end of the story, however. Both student enrollment and prices went up over the past four years, too. In inflation-adjusted, per-pupil terms, state spending on North Carolina public schools rose 3 percent over the past four years, following an 11 percent drop during the last two years of Democratic rule in Raleigh.

So, was state spending on public education cut $500 million under House Speaker Thom Tillis? Definitely not. Education spending went up, even after adjusting for inflation and student enrollment. Thatís not to say there isnít room for reasonable debate about the issue. One might argue, perhaps, that given the size of the decline from 2008 to 2010, the legislature should have increased school spending more than it has since then in order to offset the previous cut.

But to say that Republican legislature actually reduced state appropriations to North Carolinaís public schools is to misstate the facts. Iím just old-fashioned enough to believe thatís still a no-no.

John Hood is chairman of the John Locke Foundation.


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