PRESS RELEASE
September 11, 2007

Contact: Stephen Kroes, Utah Foundation President
(801) 355-1400, ext. 5
(801) 573-8824 (mobile)

UTAH’S PUBLIC EDUCATION FUNDING EFFORT FINALLY RISING

Utah Foundation today released a research report updating its estimate of Utah’s public education funding effort and providing historical perspective on education funding levels. The report, entitled “Utah’s Public Education Funding Effort: Update and Historical Perspective,” is attached to this release and is also available at www.utahfoundation.org.

The report finds that, after about ten years of decline, the Legislature has increased state funding effort for public education in the most recent two state budgets. This is the result of large state budget surpluses resulting from strong income tax growth. Funding effort is defined as total revenues for public education per $1,000 of personal income. When funding effort declines, it is because education funding is growing slower than Utah’s overall economy. When funding effort increases, education funding is growing faster than the overall economy.

The decline in education funding effort after 1995 was unprecedented, given the state’s long history of very high proportions of personal income dedicated to public education. Looking at historical data, Utah traditionally placed a very high priority on education spending, ranking in the top 10 states for education spending per $1,000 of personal income through the 1960s, 70s, and 80s. This produced a phenomenon called “Utah’s education paradox” which was that Utah spent a very high proportion of income on taxes for education, even though it had the lowest (or near-lowest) per-pupil spending in the nation. Of course, this was because of Utah’s high birthrate and the consequently large population of students to educate.

The education paradox disappeared after the mid-1990s, when a steady decline eventually pushed Utah’s funding effort below the national average. This decline was partly caused by tax reductions, but largely by the diversion of funding growth to other state priorities, including healthcare, prisons, and transportation.

Speaking of the trend in funding effort, Utah Foundation president Steve Kroes said, “The most recent two budgets are finally beginning to turn this trend around – the Legislature appropriated generous increases for education, adding to more than $600 million over a two-year period. This will have a real impact on improving Utah’s education system, especially if it continues to grow in the future.”

For fiscal years 2007 and 2008 (the current fiscal year), income tax revenues appropriated to public education have grown faster than the economy for the first time since 1997. The report finds that the earmarking of income taxes to public and higher education will likely lead to more increases in funding effort in the coming years, unless the Legislature reduces income taxes to dampen the growth.

The report also examined Utah’s per-pupil spending compared to other states. The per-pupil comparisons are two years old, from fiscal year 2005. President Steve Kroes said, “It is daunting to realize that just to rise one place in the rankings that year would have cost $500 million. And to place in the middle of all the states would have required $1.4 billion, or a 55% increase over what we spent in 2005! Nevertheless, if Utah continues steady, healthy increases in education funding, it is possible we can at least rise from our last-in-the-nation ranking within a few years.”

The report is freely available to the public on the web at www.utahfoundation.org.

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The mission of Utah Foundation is to promote a thriving economy, a well-prepared workforce, and a high quality of life for Utahns by performing thorough, well-supported research that helps policymakers, business and community leaders, and citizens better understand complex issues and providing practical, well-reasoned recommendations for policy change.