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More to spending than meets the eye

More to spending than meets the eye

Fred Birnbaum
September 29, 2014
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September 29, 2014

A recurrent theme of Idaho's establishment reads that since the great recession, Idaho has underinvested in K-12 and higher education and has reaped the whirlwind. The belief is that Idaho's ranking at the bottom on per pupil K-12 education spending corresponds to the lowly ranking on per capita income. Very little in-depth analysis is provided about the composition of the jobs that have declined, the reasons for those declines or the vast differences in the rural vs. urban economic landscapes.

Virtually all of the discussion on education is focused on general fund education spending and per pupil spending. Interestingly, student performance relative to other states receives surprisingly little mention. Student performance based on the National Assessment for Education Progress data places Idaho roughly in the middle of the pack nationally. Results vary by grade level and whether you review reading or math, but overall, Idaho can't be described as a bottom-tier state based on student performance.

The topic of relative educational performance in the U.S., in general, is a painful one. The Program for International Student Assessment shows the U.S. lagging behind a long list of countries in math and reading performance, despite having one of the highest per pupil spending profiles in the world.

Part of the "cost" problem is administrative bloat. In Idaho, according to a 2013 Friedman Foundation report, from 1992 to 2009 the number of students increased 22 percent while administrators and nonteaching staff increased 73 percent.

To summarize: Idaho has one of the lowest per pupil spending rates in the nation, but relatively middle-of-the-pack performance. Do those supporting higher per pupil spending guarantee that Idaho's standing relative to other states would improve commensurately? If we increase per pupil spending 20 percent, would that translate into a 20 percent improvement in test results and a 20 percent improvement in per capita income?

These are legitimate questions because the next question is where will the money come from? Idaho already has a higher marginal income tax rate than adjacent states with the exception of Oregon, which has no sales tax. Nevada, Wyoming and Washington have no income tax. Will raising income taxes from already uncompetitive levels attract and retain businesses? Even if the case can be made to eliminate some sales tax exemptions, would their elimination be exchanged for a lower tax rate or simply represent a tax increase on businesses?

What has been missing from the discussion on economic performance is consideration of what combination of tax, regulatory and education policy will attract new industries to southern Idaho? Most of the people living in Idaho were not born here, so the notion that we can't attract good people or employers due to our education infrastructure is illogical.

The second major economic component is the rural areas and the related management of federal lands. More than 60 percent of Idaho is federal land with 75 percent of Idaho's timber resources on federal lands. Timber harvests on federal lands are down about 80 percent during the last 30 years and about 90 percent from their peak.

To put the picture in perspective, Idaho's total timber harvests are roughly back to levels of the late 1940s.

How can we have a rational discussion about Idaho's performance and ignore natural resource-based industries? North Dakota led the nation in 2013 in GDP growth based on resource extraction, not student performance.

Defining Idaho's income "problem" as a function of relatively recent K-12 spending trends defies logic, particularly if you ignore the overarching issues of tax, regulatory and federal land-use policy.

Read more here: http://www.idahostatesman.com/2014/09/23/3389628_more-to-spending-than-meets-the.html?rh=1#storylink=cpy

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