By Jeff Pett, Fleetwood Group
Like many of you, we at Fleetwood Group are trying to figure out just where we are on the economic doldrums timeline. Just how long is this valley going to last in our industry? After the economy tanked in late 2008, we continued to set sales records for another nine months. Schools were budgeted through to next June; generally, so they continued to spend the money they had been allocated. By the time that money was gone, the economy was in such dire straits that school boards across the country got more conservative than ever.
Oversimplifying the last couple of years, schools/states had an injection of cash via the stimulus package from Washington that gave some cash flow that allowed schools to avoid layoffs and buy the supplies and furniture they needed…for a while.
In 2011 it has been a whole different story. We have come to what many in education are calling the “Funding Cliff”; that point where the stimulus money available the past couple of years allowing schools to limp along is coming to an end.
When I sat down to write this month’s blog I was thinking I could find a couple of nice positive examples of where the school furniture and equipment world was showing some signs of life. On a recent trip to the East Coast I was told by one of our legacy dealers that school spending in New Jersey was looking up. The line of thought was that their governor had put their school budgeting through the mill a couple of years ago, so even though the schools now have less money, they at least know what they have to work with and are spending it. If that is true, then maybe we are looking at one or two more tough years across the country until every state is able to figure out how to do more with less. The New Jersey example has been one of my favorite things to site as we worked our way through another tough summer.
Unfortunately, everything I now read about K-12 funding in New Jersey is that the courts are systematically overturning the governor’s belt tightening based on their state constitution’s “guarantee of a ‘thorough and efficient system of free public schools.’” So maybe the schools there have been spending more this year based on some sense of firm financial footing, but it sounds like that battle is not over and the state may still have to figure out how it will fund schools going forward.
Okay, so maybe I need to take a good look at Indiana for some positive news. So back to “Bing” I go. Indiana has been in the news a lot this year with their governor tackling tough cost issues aggressively. However, here again everything I can find points to funding battles happening within the state, with the courts hearing lawsuits that will likely take some time to sort out with rulings and appeals.
Just to remind ourselves as to where K-12 school funding comes from, here are the nationwide averages of the breakdown of every dollar spent on funding schools:
- 45.6 cents comes from the state
- 37.1 cents comes from local sources
- 8.3 cents comes from the Federal government (up from 5.7 cents in 1990)
- 9.0 cents comes from “private sources”, mostly spent on private schools.
So, as much as our leaders in Washington talk about K-12 education, it is constitutionally mandated to be primarily a responsibility of states to fund education.
Let me also be clear here, I am not in favor of bashing teachers or school officials. I was a high school teacher once upon a time, and I was a Director of Operations for a school district along the way, too. Budgeting for schools is a very difficult process. Most of the cost is in salaries and benefits, in most cases that accounts for over 85 percent of school costs. And the public is very demanding of schools teaching their kids at the highest level, in all kinds of circumstances, with more and more “services” expected. That makes the cost of education go up on the order of how our cars prices have gone up over the years. Part of it is inflation, yes. But a lot of it is what we are expecting of the final product. (There were no lighted sun visors or digital compasses in the ‘60s, but now those are must-have items.)
So I come to several conclusions, none of which reflect the positive news was searching for:
1. With 82.7 percent of the funding for schools coming from state and local sources, this is more of a “local” issue than a federal one. States will have to lead the charge to change from “business as usual” in school funding. Change is needed, but change is heavily resisted.
2. Wherever the funding comes from, we are paying for it via our tax dollars. Tax dollars come from property tax, income tax, and sales tax, whether from individuals or from businesses. If we want good schools we will have to be willing to pay for them somehow. AND schools will need to control costs better.
3. For states to get on top of funding K-12 education, the economy has to rebound enough to start increasing the cash flow into state coffers.
4. Considering the state our federal government is in when figuring out how to “right the ship” financially, I am fairly bearish on the prospects of things being sorted out enough to provide the confidence needed by next summer’s 2012-2013 budgeting for schools to be of much help before June of 2013
I hope I am wrong and that the election year cycle of 2012 brings with it some economic growth and the confidence going forward to start bringing in the cash needed to fund our schools… and allow them to buy more of what we build!
