What effect does spending on educator benefits, such as pensions and healthcare, have on district and state K-12 education budgets? In a new report, “Benefits Take Larger Bite out of District K-12 Education Budgets,” we track ten years of spending data in nearly 14,000 districts across the country. The results are alarming.
Our analysis shows that nationally benefit spending consumes a greater share of K-12 spending overall in 2014 than it did in 2005. Nationally, 19 percent of K-12 spending goes toward benefits, an increase of more than 3 percentage points. At the low end, some states devote as little as 8 percent of their spending toward employee benefits, whereas at the high end, some states devote more than 30 percent of their K-12 budgets toward benefits. All but three states saw the share of their spending dedicated to benefits increase in the window of our analysis.
Overall, state education budgets increased only 1.6 percent from 2005 to 2014, after adjusting for inflation. In contrast, over the same period benefit spending increased 22 percent. This pattern holds in many states. In fact, 23 states effectively sent less money to the classrooms in 2014 than they did in 2005 due to the combination of stagnant or decreasing investments in K-12 education and burgeoning benefit costs.
This should worry teachers and legislators alike. Indeed, a considerable amount of benefit spending goes to pay down debt rather than for current employee benefits. That is, the higher spending is not translating into more valuable pensions or more generous healthcare benefits. And legislators may be frustrated that their investments in K-12 education are not reaching classrooms.
The problem of rising benefit costs will continue and likely grow for the foreseeable future. There are no easy fixes to these problems, but it will be critical for legislators to find solutions that balance paying down past obligations with contributing to the education of current students.