Category Archives: State & Local Finance

Coronavirus Response Resource Center

Source: Government Finance Review, 2020

The resources in this center reflect the latest guidance and materials on the recently enacted laws passed in response to the coronavirus pandemic. The programs and funding were included in the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Given the fluid nature in the release of guidance and implementation of the various programs.

Education Finance Reform and the Great Recession: Did State Policy and Fiscal Federalism Improve Education Spending, School Resources, and Student Achievement in Pennsylvania?

Source: Matthew P. Steinberg, Rand Quinn, J. Cameron Anglum, Journal of Education Finance, Volume 45, Number 4, Spring 2020
(subscription required)

From the abstract:
We estimate the impact of school finance reform on adequate and equitable district spending, school resources and student achievement in Pennsylvania. From the 2008-09 to the 2010-11 school years, amid the Great Recession, Pennsylvania’s Act 61 increased aid to school districts spending below state-determined adequacy targets (“shortfall districts”). We find that the gap in adequate spending between shortfall and no-shortfall districts narrowed by the final year of Act 61 when increases in education aid were provided through both federal stimulus and state funds. Effects on adequate spending were concentrated among districts with the greatest spending shortfalls and who served more economically disadvantaged communities and academically struggling students. However, few improvements in school resources and no effect on academic achievement were found. Our results suggest that federal aid can support adequate district spending during recessionary periods when state education budgets are constrained. However, if aid is modest, adequacy and equity improvements may not improve resources or achievement.

Gem State Inequalities: Examining the Recent History of Idaho Public School Funding

Source: Ali Carr-Chellman, Taylor Raney, Dan Campbell, Journal of Education Finance, Volume 45, Number 4, Spring 2020
(subscription required)

From the abstract:
This article focuses on the application of Savage Inequalities-based analyses of data from the state of Idaho with a focus on equitable rural school funding. While Kozol’s famous 1991 book-length work examining school inequalities was focused on urban centers and completed several decades ago, this article offers an updated examination of imbalances in funding and practice across the primarily rural state of Idaho. By examining state documents through a secondary data analysis, this paper extends an earlier exploration of the intricacies of school funding such as implications for casino income as well as the recent history of state level funding1. Findings from the current examination indicate that while per-pupil funding by school district in the state of Idaho was equalized by state distributions through 2008, impacts of state cuts at that time increased inequities again when comparing school funding across the state. Because of this, rural, remote, and tribal schools are often dramatically underfunded relative to perceived need.

The Effect of Higher Education Performance Funding on Graduation Rates

Source: Roger Larocca, Douglas Carr, Journal of Education Finance, Volume 45, Number 4, Spring 2020
(subscription required)

From the abstract:
Since 1979 more than thirty states have adopted “performance funding” for public institutions of higher education. Under performance funding, a portion of the state appropriations for each institution is determined by the institution’s achievement of performance goals on such metrics as retention and graduation. We argue that several characteristics of higher education institutions are likely to weaken the effect of performance incentives on graduation rates. To test these expectations, we develop a comprehensive database that identifies the institutions subject to graduation performance metrics. While most previous researchers have coded each state with a simple binary measure, indicating whether performance funding exists or does not exist in each year, we have determined for which exact institutions and in which years graduation metrics have been used to allocate state appropriations. We combine this detailed performance-funding data with institution-level data on graduation rates and other important factors from the Integrated Postsecondary Education Data System from 1997-98 through 2015-16. We estimate a difference-in-differences model that reveals no significant impact of performance funding on the graduation rates at 4-year institutions, but we find that performance funding is associated with a significant increase in graduation rates at 2-year institutions under certain conditions.

Pandemic Impacts on Library Consortia and Their Sustainability

Source: George Machovec, Journal of Library Administration, Vol. 60 no. 5, 2020
(subscription required)

From the abstract:
Library consortia are planning on how their funding, programs, and services may need to change with the societal tumult caused by the 2020 Covid-19 pandemic. Most consortia in North America are either state agencies or non-profit corporations which may have different approaches and options available for solving substantial budget shortfalls. Changes may need to take place in staffing, programs, and services. Some consortia may have financial portfolios which may help on filling-in budget holes. Other consortia have applied for, and received, funds from the Paycheck Protection Program (PPP) to help with staffing. Many library consortia will not see a quick recovery but may have long-term consequences as their member libraries and parent organizations try to recover.

City Fiscal Conditions 2020

Source: National League of Cities, August 2020

From the summary:

In its 35th year, the City Fiscal Conditions report continues to provide insight into the fiscal health of cities, towns and villages from across the nation. The findings in this year’s report reveals that America’s cities are experiencing the fiscal consequences of this pandemic-downturn at an unprecedented speed – and like recent recessions, it will take years for municipal budgets recover from the impact of COVID-19.

By diving deeper into the survey results from 485 cities from across the country, we can see just how the coronavirus pandemic has affected the lives of residents and why direct funding is critical to the financial health of our nation.

Implications of the Covid-19 Pandemic for State Government Tax Revenues

Source: Jeffrey Clemens, Stan Veuger, NBER Working Paper No. 27426, June 2020
(subscription required)

From the abstract:
We assess the Covid-19 pandemic’s implications for state government sales and income tax revenues. We estimate that the economic declines implied by recent forecasts from the Congressional Budget Office will lead to a shortfall of roughly $106 billion in states’ sales and income tax revenues for the 2021 fiscal year. This is equivalent to 0.5 percent of GDP and 11.5 percent of our pre-Covid sales and income tax projection. Additional tax shortfalls from the second quarter of 2020 may amount to roughly $42 billion. We discuss how these revenue declines fit into several pieces of the broader economic context. These include other revenues (e.g., university tuition and fees) that are also at risk, as well as assets (e.g., pension plan holdings) that are at risk. Further dimensions of context include support enacted through several pieces of federal legislation, as well as spending needs necessitated by the public health crisis itself.

Fiscal Survey of the States – Spring 2020

Source: National Association of State Budget Officers, 2020

From the summary:

Note: This report is based primarily on data from governors’ budget proposals for fiscal 2021 and reflects state fiscal conditions before the COVID-19 pandemic and economic crisis. NASBO expects the data in this report will serve as an historical baseline for comparison to post-COVID fiscal conditions. Read more about the post-COVID-19 state budget outlook.

This report shows that before the COVID-19 pandemic and economic crisis, state fiscal conditions were strong overall and rainy day fund balances were at an all-time high. Governors’ (pre-COVID) budgets for fiscal 2021 were focused on investing in key priorities while calling for modest spending growth, with an emphasis on fiscal discipline and preparing for the next recession.

Risks Rise for State and Local Budgets: COVID Stress Test Update

Source: Dan White, Emily Mandel, and Colin Seitz, Moody’s, June 24, 2020
(subscription required)

• States and local governments will need approximately $500 billion in additional aid over the next two fiscal years to avoid major damage to the economy.
• Timing is of the essence, as state and local policymakers face several important budget deadlines in the weeks and months ahead.
• If action is not taken quickly enough, the spending cuts and tax increases that would need to be undertaken could cost several million additional jobs and further delay the recovery.
• The specter of a second wave of widespread infections is broadening the distribution of potential downside scenarios.