Source: Pisei Chea, Nicholas Samuels, Emily Raimes, Timothy Blake, Nadia Morelos, Moody’s, Sector In-Depth, June 4, 2018
Public demand to increase K-12 education funding has grown in many states, a reaction to years of restrained spending in this area since the 2008-09 recession. Between fiscal 2002-07, total K-12 funding from federal, state and local sources increased at a compound annual growth rate (CAGR) of 5.8%, then slowed to a CAGR of 1.8% from 2009-16 despite the economic recovery. The slowdown was driven by declining federal funding, slow state and local tax revenue growth, and generally more austere policy priorities in some state capitals. Teachers in a handful of states have recently organized walkouts to demand higher teacher salaries and increased education spending. States have significant flexibility to adjust their budgets to meet policy demands, especially as tax revenue growth has strengthened in the past year; willingness to do so varies, however, and states will continue to be pressured to balance K-12 spending with other program demands.