Why raid investments when checking account is overflowing?
Proposed Constitutional Amendment 1 would permanently increase by 25% the annual monetary transfers from the state permanent fund to the general fund. The transfers would be increased from 5% to 6.25% of the recent average value of the fund. The increased transfers would benefit the public schools and pre-K education, initially by about $85 million and $130 million, respectively.
This amendment is unnecessary and undesirable. The general fund does not need this money. Current revenue estimates are that next year the general fund will have recurring revenue exceeding recurring spending needs by hundreds of millions or even more than a billion dollars. These estimates are much more optimistic than they were when the proposed amendment was voted onto the ballot. Funds in the permanent fund produce a substantially greater return than those in the general fund, so unnecessary transfers out of the permanent fund should be avoided.
The current funding level for early childhood education and public education is not the result of lack of funds. Additional funds have not been appropriated for these purposes because the legislative and executive branches have not decided this would be a wise expenditure at this time.
The Legislature and the executive are very supportive of public schools and pre-K education. The three legislative education committees include many members who are employed by or retired from educational institutions. The three legislative budgeting committees have consistently recommended substantial increases in education spending whenever money is available. The governor is vocally supportive of education, and her administration has education and budget experts.
In recent years the Legislature and executive have been particularly attentive to the needs of early childhood programs; however, those may be unable to efficiently use the proposed massive influx of $130 million, an amount likely to increase annually with subsequent growth in the permanent fund.
Current state funding for early childhood educational services, including education and related programs such as childcare assistance and home visiting, is about $450 million. This has more than tripled over the last 10 years. The analyses of both the Legislative Education Study Committee and the Legislative Finance Committee have concluded these programs have not been able to handle efficiently the rapid growth in funding they have received to date. They observe “(T)he state has struggled with coordination and delivery of those services due to rapid growth.” These analyses state that in some cases the expenditure of state funds has simply replaced federal Head Start funding, and in others funding has outpaced the availability of a qualified workforce. Further, the rapid spending growth has led to regional inconsistencies, with oversaturation in some communities, lack of access in others.
Meanwhile, the public schools budget receives more than $3 billion annually from the state. Annual increases almost always exceed $85 million. The amendment will likely spend permanent fund instead of general fund money, essentially taking money from the investment instead of the checking account, even though the checking account is flush.
There is no visible plan for spending, nor are the amounts based on a determination of need. The dollar amounts are simply produced by a percentage of the permanent fund. It is unwise to constitutionally require an arbitrary amount with likely automatic annual increases. The Legislature should be able to make appropriate adjustments based on need and program success, particularly in an era of declining birth rates.
The amendment should be defeated. The Legislature, which will have massive amounts of money available, can objectively address educational funding needs in its annual sessions.