States will continue to see fiscal challenges in the coming years, a prospect that does not bode well for increasing their K-12 budgets, analysts from the National Conference of State Legislatures said at a post-election meeting here.
Along with Medicaid and other health-care expenses, precollegiate education is commanding a larger share of state budgets, the analysts said, squeezing out other programs in a time of revenue shortfalls and aversion to higher taxes.
Moreover, the federal government’s huge budget deficit and other pressing priorities—including the Iraq war, homeland security, tax changes, and Social Security—could take a big bite out of federal funds available to states, experts at the Nov. 5 gathering said.
“We clearly are very concerned about what all this means for state budgets,” said state Delegate John A. Hurson, a Democrat in Maryland’s lower house who is this year’s president of the NCSL.
The Denver-based NCSL brought its analysts here three days after the general elections to help dissect how the results might affect state policy—and to make the case that the outcomes of state-level campaigns should be looked at in addition to those for federal offices.
“All the oxygen gets sucked up by the race for the White House, but we happen to think that [states] is where the work is really being done,” said NCSL senior fellow Tim Storey.
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Calling state legislative races the “hidden election,” Mr. Storey said some noteworthy trends emerged from the results. Among them were the dominance of Republicans in the South, and the strong showing in some places by Democrats, who picked up significant numbers of legislative seats in Minnesota, New Hampshire, North Carolina, and Vermont.
Close Party Splits
But the results did little to ease the close divisions between the two parties in many states.
“While the Democrats did manage to do OK at the state level, we are now in the position of a country that is very, very evenly divided,” Mr. Hurson said.
Given that reality, analysts said that legislators in many states will have to find ways to work together on big-ticket items such as the federal No Child Left Behind Act, which was identified by the experts here as one of the top issues for state lawmakers in the upcoming legislative sessions.
An NCSL task force has been meeting monthly since April of this year to discuss potential changes to the No Child Left Behind law. The panel’s recommendations, which are expected to center on the costs of implementing the law and the viability of states’ testing systems, are due to be released in late January.
Corinna Eckl, the NCSL’s fiscal-affairs director, said the preliminary data from states’ fiscal 2005 budgets show that revenues are at about the same levels they were in fiscal 2002, before states began to see massive budget shortfalls from the recession.
“I don’t think revenues will have the ability to return to the robust levels of the 1990s,” Ms. Eckl said. Further, she added, “we are in a more conservative fiscal climate.”
That conservative climate extended to ballot initiatives related to school finance that were put before voters around the country on Nov. 2. In general, voters were receptive to measures that increased education funding—if the proposals did not translate into higher taxes, said Jennie Bowser, an NCSL program principal. (“Voters Largely Reject Funding, Policy Shifts,” Nov. 10, 2004.)
While the tax-limitation movement may be starting to sputter, she said, the idea of tax increases for education is still not drawing many votes.
But states will be under a lot of pressure to restore money cut in the budgets for higher education in the last two years, as most residents see college as a means of improving their states’ economies, Ms. Eckl said.
The cuts to higher education have shifted more costs, including large tuition and fee increases, onto students and their parents, she said.
“There’s going to be additional pressure on lawmakers to relieve these pressures and give students greater access and more affordability,” Ms. Eckl said.
