School funding and inflation

School funding and inflation

The 2019 legislative session brought just the second increase to K-12 per-pupil spending in more than a decade, raising the minimum amount Louisiana spends per child from $3,961 to $4,015. This increase provided much needed relief for schools and districts, who have been expected to raise test scores, graduation rates and other outcomes, despite stagnant funding. A new blog by LBP’s Neva Butkus explains how this increase in K-12 funding in an important step toward reinvesting in public education, after years of neglect: 

Prior to 2008, the Legislature routinely approved annual 2.75% increases to the Minimum Foundation Program formula, which distributes state dollars for public schools. When Louisiana’s budget cratered as a result of tax cuts and the Great Recession, Louisiana abandoned these annual inflation adjustments. If base per-pupil spending had actually kept up with inflation since 2008, Louisiana would spend $657 more per pupil than it currently spends for the 2019-2020 school year. If the formula continued to increase by 2.75% each year through the 2020 school year, base per-pupil spending today would be $1,322 higher. 

Block grants for Medicaid
Tennessee is petitioning the federal government to receive its federal Medicaid dollars in a single lump sum, which would make it the first state to adopt an idea that has been a conservative hobby horse since the Ronald Reagan era. The block grant proposal would not apply to prescription drugs or money that goes to safety-net hospitals. But patient advocates worry that it would lead to massive reductions in healthcare access among low-income populations, and a $110 billion to $168 billion drop in federal Medicaid spending for children over 10 years. Amy Goldstein of The Washington Post writes

Michele Johnson, executive director of the Tennessee Justice Center, a group representing vulnerable residents needing health care and other assistance, said the proposed changes to TennCare would be “devastating for our health infrastructure, for the Tennessee economy, and for our communities.” Johnson disputed the governor’s assertion that the state has been uncommonly efficient in running TennCare, saying that enrollment fell when the state had difficulty adapting its Medicaid eligibility system to comply with ACA rules.


Louisiana’s credit rating is improving
A national credit agency has increased Louisiana’s credit outlook from “stable” to “positive.” This change can be attributed to the stable and predictable state budget that resulted from Louisiana’s sales tax compromise in 2018. A strong credit rating means the state can borrow money at lower rates to pay for infrastructure projects, which saves taxpayers money. The AP’s Melinda Deslatte has more

Moody’s said Louisiana’s outlook change “reflects the significant improvement in the state’s financial position, its recent record of closing budget gaps with recurring solutions and relative stabilization of its economy.” The rating agency also gave a note of caution, however, saying Louisiana’s savings accounts and reserve funds fall short of an appropriate cushion for the state. Still, the Moody’s announcement is another sign that national credit agencies have looked favorably on the financial stabilization Louisiana achieved when Edwards, a Democrat, and the majority-Republican Legislature reached a seven-year tax deal in 2018. 


Federal spending on children is down
When the government invests in children and their families through education, healthcare, and nutrition, they are making an investment in the future. According to The Urban Institute, that investment is dwindling. Federal investments in children fell 1.9% as a share of GDP in 2018, the lowest rate of support in a decade: 

The challenges facing American children provide context for this report. The child poverty rate (18.0 percent in 2017) is much higher than the poverty rates for adults ages 18 to 64 (11.6 percent) and seniors ages 65 and older (9.3 percent). Family incomes are unequally distributed, and many children live in families with low incomes. A recent nationally representative survey revealed patterns of material hardship and food insecurity among families with young children: 44.3 percent of parents of young children reported having difficulties or being unable to pay for food, medical care, housing expenses, or utilities in the past year (Sandstrom, Adams, and Pyati 2019).


Number of the Day
$54 – The additional amount Louisiana requires school districts and the state to spend per student for the 2019-2020 school year. (Source: Louisiana Budget Project)