Growth vs. Gimmicks Part VI: Following the money in Maine’s education system

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Long-term Growth vs. Short-term Gimmicks is a seven part series examining the impact of the COVID-19 pandemic on Maine’s economy, the corresponding effects on the state’s biennial budget, and reforms lawmakers should pursue to achieve real budget savings. Check back tomorrow for Part VII, the final part in the series.

K-12 EDUCATION

Education is the cornerstone of society, as it helps to cultivate the future workforce and culture, but also because it stabilizes a parent’s ability to earn a wage from day to day. This is even more apparent as attempts to adapt to the pandemic by traditional public schools have been hit-and-miss. Could it be a coincidence that record numbers of American parents are saying that they want more choice in directing their child’s education?

The widespread closures of schools and separation of young Mainers from their peers over the last year caused its own pandemic-related shock throughout the state’s education system. Thousands of teachers and students across Maine were thrust into unfamiliar and unstable situations, having to use untested remote or hybrid learning models in order to make it through the school year. Unfortunately, thousands of Maine students are still caught in limbo today, but many have begun to opt-out of traditional schooling altogether.

In June, the Maine Department of Education reported the ranks of homeschooled students grew 10.5% from the year before. From 2008 to 2014, that number had remained relatively stable: around 5,000 students. Since 2014, homeschool enrollment has grown nearly 35%. Clearly, parents are craving more options than their assigned district school.

After the 2019-2020 school year, Maine public school enrollment dropped by 4.4%. Falling total enrollment is a decades-long trend for Maine, with 34,563 (16.7%) fewer students today than in 2001, but this past year was the largest single-year dip on record. Despite this, per-pupil spending grew more than 5%.

When adjusted for inflation, per-pupil spending today is nearly 70% higher than twenty years ago, with little to show for it. Statewide test scores for Maine high schoolers, as well as graduation rates, have remained relatively stagnant over the last five years.

The governor, administration, and legislators should aim to scale back overall spending by targeting a per-pupil cost around $12,150, similar to that of the last fiscal year. This would ensure adequate funding for students and teachers, and free up at least $100 million to cover expected shortfalls and to relieve municipalities and taxpayers in the immediate future.

In 2019, Governor Mills’ and the Legislature allocated $300 million more to education than the previous biennium. This does not count the more than $337 million in federal funds spent through the state’s Coronavirus Relief Fund in the last year for meal delivery, protective gear, hand washing stations, classroom barriers, and more. In Mills’ latest proposal for FY22/23, education spending is slated to increase another $253 million. Has Maine noticed significant benefits to students from these decisions? 

Much of Mills’ proposed increase to education is “baked in,” accounting for the $40,000 statewide minimum starting teacher salary legislators passed last session and the recently signed state employee contract, which guaranteed at least 3% yearly wage and salary increases. While the contract cannot change, lawmakers might consider removing the minimum teacher salary from statute. Allowing wage and salary rates to be determined through collective bargaining could remove yet another pressure point for state and municipal budgets.

There is still plenty of room for cost savings in Maine’s education system without disrupting funds dedicated to student instruction or teachers’ wages and benefits. System and school administration account for 8.4% of all education spending, or more than $290 million over the biennium. This does not account for transportation costs, student and staff support, special education, or other costs related to classroom instruction. Lawmakers should provide greater incentives for towns to promote smart reorganization and allow districts to pool resources and competitively bid for better vendor rates on supplies and services, including health insurance.

Unfortunately, last legislative session, Maine lawmakers severely restricted educational opportunity. Bills to permanently cap the number of charter schools at 10 and cap the amount of students virtual charters may enroll both passed and were signed into law by Governor Mills. Instead of doubling down on this cynical philosophy, lawmakers should recognize that more choice leads to better satisfied students and families. Maine should make it easier for education funds to travel with each student to the learning environment best suited to their needs, whether it be a public charter school, a virtual school, homeschooling, or a so-called “pandemic pod.” Maine should directly fund students, not institutions.

Maine could achieve greater flexibility for students and economize more than $20 million over the next biennium if only 1% of eligible students participated in a program similar to Arizona’s Educational Savings Account (ESA) program.

Since ESA-enrolled Arizona families receive 90% of the state share of per-student education funding, a study of the first eight years of the state’s program found that $600 goes to traditional public school districts for each enrollee. Because it does not take into account other public funds related to education like transportation reimbursement, facilities maintenance, and locally-approved property tax increases, as more students enroll in an ESA, average state per-pupil spending increases overall.

As overall student enrollment steadily declines, and per-pupil costs increase, Maine lawmakers would be wise to look at ways to make education funding more flexible, efficient and accountable to parental and student satisfaction. Instead of pursuing this strategy, the Mills administration modestly increases the amount of General Purpose Aid to local school districts, in order to ensure adequate staffing and protective equipment necessary to get teachers and students back into school.

THE UNIVERSITY OF MAINE SYSTEM

From 2019 to 2020, applications for federal financial aid from Maine high school seniors, also known as FAFSA forms, were down 12%. This phenomenon could be explained by the pandemic uncertainty, but it also demonstrates the ongoing shift away from youth seeking four-year college degrees. Ultimately, Maine will be sending fewer students to its institutions of higher learning as more forgo the contemporary college experience right after high school graduation. With fewer high-schoolers seeking an education through Maine’s universities, especially post-pandemic, now is the time to fully audit these costs to taxpayers.

Every year, Maine taxpayers are asked for no less funding for fewer and fewer students. Undergraduate enrollment in the University of Maine System (UMS)—excluding “Early College” students (highschoolers taking college courses)—dropped nearly 7% over the last five years. This includes double-digit enrollment losses at the Augusta (17.5%), Farmington (12.1%), Fort Kent (16.8%), and Machias (18.5%) campuses.

Over the last biennial budget, the University of Maine System received more than $400 million through the General Fund, 30% more than both New Hampshire and Massachusetts spend on higher education as a share of their budgets. This is a conservative number since Maine partially excludes tuition, fees, and employer contributions to health benefits and pensions in higher education expenditure reporting.27 By reducing taxpayer disbursements to the University of Maine System to levels comparable to our neighbors, lawmakers could return nearly $80 million to be used for the most critical state priorities.

In Governor Mills’ latest budget proposal, the administration proposes to flat fund UMS over the next biennium. While state leaders should be interested in a full audit of the university system’s balance sheet, one part of the budget proposal would diminish transparency and oversight of UMS borrowing. An aspect of Part PPP, the final section of the FY22/23 budget proposal, would exclude certain projects related to “capital lease obligations, financing for energy services projects or interim financing for capital projects” from legislative input. Maine law currently states that any borrowing exceeding $350 million in the “aggregate principal amount” must be submitted for legislative approval “at least 30 days before closing on such borrowing.” A UMS official confirmed to Maine Policy that this change would exempt borrowing for these projects from the statutory cap.

Maine taxpayers currently spend more than $16 million every year on debt service from UMS borrowing. Why should taxpayers and lawmakers have less oversight on this budget line? While UMS debt is not backed by the credit of the State of Maine, excluding certain projects from borrowing limits could facilitate a perverse incentive toward runaway spending and borrowing, leading to a weaker UMS credit rating and requiring greater financing from taxpayers. To avoid this potential pitfall, lawmakers should revise Part PPP of Gov. Mills’ budget proposal and remove this provision.

Check back tomorrow for Part VII, which concludes the series and focuses on solutions to generate more revenue and close Maine’s transportation funding shortfall.