From the Statehouse

State Ed Fund headed towards $1.6 billion

As voters prepare to decide whether to approve a $950 million tax increase for K-12 schools, new revenue forecasts released by state economists Thursday project a large windfall for a supplemental fund for public schools.

Colorado CapitolThe State Education Fund (SEF), an account dedicated to K-12 spending, will receive a $1.1 billion infusion after the current budget year ends on June 30, according to both legislative and executive branch economists. That, combined with other revenue, means the fund will have a balance of $1.6 billion in the upcoming 2013-14 budget year.

A prominent supporter of the ballot measure that would increase K-12 funding says he’s not too concerned that voters will question a tax increase when the state has so much education cash in the bank.

“These are one-time funds,” said Sen. Rollie Heath, D-Boulder. “This is just the aberrations of the economy. … You can explain it that way very easily.”

The size of the SEF was an issue during legislative debates earlier this year over Senate Bill 13-213, co-sponsored by Heath and the brainchild of Sen. Mike Johnston, D-Denver. That new law proposes substantial changes in the state’s school funding system, including more money for preschool, kindergarten and at-risk students. But the new system won’t kick in unless voters approve a tax increase to pay for it.

State Education Fund chart
Click to open larger varsion.

As SB 13-213 was moving through the legislature, some Republicans argued that money from the growing SEF should be used to fund K-12 improvements before asking the voters for new revenue. Legislative Democrats supported Johnston’s plan, but some were unhappy that more SEF money wasn’t used to further increase school funding in the upcoming 2013-14 school year.

Legislative leaders, the Joint Budget Committee and the Hickenlooper administration successfully resisted those efforts, arguing that the SEF should be used as a cushion to supplement school spending over several years and to help avoid too much education pressure on the General Fund, the state’s main account.

Henry Sobanet, director of the Office of State Planning and Budgeting, made that point Thursday. He said that stockpiling money in the SEF “has solidified the financial situation for the whole state of Colorado in a significant way. … That policy decision I believe will pay dividends for many years into the future.”

Heath and state economists are correct in saying the SEF is volatile. The fund was below $600 million a year from 2007-08 until this year, and the balance is expected to drop to $827 million in 2014-15.

Concerned about the state of the SEF, the 2012 legislature decided that any excess state revenues at the end of 2012-13 budget year should be rolled into the fund. (Another, smaller rollover was ordered during the 2013 session.) Each of the five sets of revenue forecasts made since the 2012 session adjourned have shown growth in state revenues, meaning that the income to the SEF now is considerably larger than envisioned when the rollover plan was laid.

The fund also receives a mandated one-third of 1 percent of state income tax revenues, estimated at $484 million next year.

The economy’s improving, but …

Economists from Sobanet’s OSPB and from the staff of the Legislative Council make revenue forecasts to the budget committee every June, September, December and March, providing key baseline information to the governor and lawmakers at various steps in the annual budget cycle.

The two sets of forecasts often agree on overall trends but disagree on specific numbers. But in the latest documents both agreed that the SEF would receive the $1.1 billion rollover.

Natalie Mullis, chief legislative economist, told lawmakers, “We have seen the economy firm up better than we expected.” The revenue figure “was significantly higher than we expected it to be.”

But, Mullis warned, about half of the higher revenues were driven by capital gain taxes on taxpayers interested in taking gains before federal tax law changes kick in. “We don’t expect that to continue.”

Sobanet agreed with that analysis, and both forecasts expects state revenues to grow more slowly in 2013-14 than they did in 2012-13.

“Even though it feels like the economy is strong and moving forward, it’s still very fragile,” Mullis said.

Committee members had plenty of questions about the economy and other issues, but no one raised the matter of the SEF and future education spending.

beyond high school

Tennessee leads nation in FAFSA filings for third straight year

PHOTO: TN.gov
Bill Haslam has been Tennessee's governor since 2011.

Equipping more Tennesseans with the tools to succeed after high school has been a hallmark of Gov. Bill Haslam’s administration. And the efforts seem to be paying off as the governor heads into his final 18 months in office.

Haslam announced on Thursday that the state has set another new record for the number of high school seniors filing their Free Application for Federal Student Aid, also known as FAFSA.

With 73.5 percent completing the form for the upcoming academic year — an increase of 3.2 percent from last year — Tennessee led the nation in FAFSA filings for the third straight year, according to the governor’s office.

The increase isn’t surprising, given that students had a longer period to fill out the form last year. In order to make the process more user-friendly, the FAFSA window opened on Oct. 1 instead of Jan. 1.

But the increase remains significant. The FAFSA filing rate is one indicator that more students are pursuing educational opportunities beyond a high school diploma.

Getting students ready for college and career has been a major focus under Haslam, a businessman and former Knoxville mayor who became governor in 2011. He launched his Drive to 55 initiative in 2013 with the goal that at least 55 percent of Tennesseans will have postsecondary degrees or other high-skill job certifications by 2025.

“The continued surge in FAFSA filing rates shows the Drive to 55 is changing the college-going culture in Tennessee,” Haslam said in a news release. “First-time freshman enrollment in Tennessee has grown 13 percent in the past two years and more students than ever are going to college. As a state, we have invested in making college accessible and open to everyone and students are hearing the message.”

According to calculations from the Tennessee Higher Education Commission, Tennessee led all states by a large margin this year. The closest states or districts were Washington D.C., 64.8 percent; Delaware, 61.6 percent; New Jersey, 61 percent; and Massachusetts, 60.4 percent.

The commission calculated the filing rates using data provided through June 30 from the U.S. Department of Education.

Filing the FAFSA is a requirement to qualify for both state and federal financial aid and is part of the application process for most colleges and universities across the nation.

To get more students to complete the form, state and local FAFSA drives have been organized in recent years to connect Tennessee students with resources, guidance and encouragement.

U.S. Sen. Lamar Alexander has championed bipartisan efforts to simplify the FAFSA process. The Tennessee Republican and former governor introduced legislation in 2015 that would reduce the FAFSA paperwork from a hefty 108 questions down to two pertaining to family size and household income.

You can read more information about the FAFSA in Tennessee here.

an almost-deal

Albany deal appears close after Assembly passes two-year extension of mayoral control

Assembly Speaker Carl Heastie at a 2015 press conference with Democratic colleagues

After weeks of haggling by state lawmakers — and a day spent huddling behind closed doors — the stage is set for a possible two-year extension of Mayor Bill de Blasio’s control of city schools.

The Assembly passed a bill in the wee hours of Thursday morning that outlines both the extension and a number of other provisions, including the reauthorization of local taxes and the renaming of the Tappan Zee Bridge for the late Governor Mario Cuomo. Notably, it does not include sweeteners for the charter school sector, which Assembly Speaker Carl Heastie has forcefully opposed.

The state Senate is expected to return for a vote Thursday afternoon, though it is not yet clear if a deal has been reached. Scott Reif, a spokesman for Senate Majority Leader John Flanagan, did not confirm a final agreement, but told reporters Wednesday night that negotiations were “moving in the right direction.”

According to Politico, the text of the bill was released just before 11:30 p.m. and passed the Assembly around 1 a.m., by a vote of 115-15.

The bill was passed in an “extraordinary session” called by Governor Andrew Cuomo this week after lawmakers failed to reach a deal during the regular legislative session, which ended last Wednesday. Mayoral control is set to expire Friday at midnight, an imminent deadline that’s led to a flurry of “what-ifs.”

If the Senate approves the deal, it would be a victory for Mayor Bill de Blasio, who has repeatedly sought multi-year extensions but been granted only one-year reprieves. It would also allay the fears of education experts on both sides of the political aisle, who have spoken out on the need to retain mayoral control rather than returning to a decentralized system run by 32 community school boards.

Losing mayoral control “would be devastating,” wrote schools Chancellor Carmen Fariña in a June 19 op-ed. “If Albany lets mayoral control lapse, there will be no one accountable for progress.”

But not everyone was pleased with the way things have gone down this week. “Today’s extraordinary session produced nothing to celebrate,” wrote Assembly Minority Leader Brian Kolb in a statement released after the vote. “There is no victory in completing work that should have been done weeks ago. No one deserves applause for passing bills in the middle of the night out of public view.”