Deltek Sr. Analyst Chris Cotner and Principal Analyst Jason Sajko report.
With the recent recession and tepid recovery, the news for most state governments has not been good. Several states (e.g., California, New York, Texas, Florida, New Jersey, Pennsylvania, Wisconsin, and Minnesota) have experienced wide-ranging and well-publicized problems including budget deficits, significant budget cuts, state shutdowns, contract freezes, public employee layoffs, rioting, and massive public protests. One area of significant concern in this financially toxic environment is public education. With National Education Week recently closing out, Deltek is publishing the following analysis of the state education funding challenges and related IT business opportunities.
Most state budgets have struggled with being in the red from 2008/2009 through the present. The massive overall budget problems led most states to consider cuts to their most expensive programs areas. Not surprisingly, most states had to look toward education for serious cuts (including closing schools, teacher layoffs, higher education faculty and staff layoffs, university program closures, and benefit cuts). In 2009, states staved off the most immediate and draconian proposals through nearly $100 billion in federal ARRA stimulus funding, mostly through the Race to the Top initiatives. In 2010, the feds provided another $10 billion in stimulus to prevent massive teacher layoffs. Throughout these lean years, most states required their higher education systems to cut, cut, and cut again in order to balance budgets. After the 2011 budget cycle, federal stimulus funding ended in a “funding cliff” that left most states in need of making the difficult choices in the face of continued slow economic growth and related budget woes. In fact, in 2011, 18 states reported needing to make mid-year, unanticipated education cuts in order to remain solvent.
While past funding is relatively well-publicized, Deltek has accurate, sound data on state budgets (including IT) through FY 2012 for all states and into FY 2013 for some. With this unique data, Deltek is able to provide accurate current and future state spending analysis. From the Deltek data, it is clear that while overall state educational funding (Pk-12 and higher) continued to rise through FY 2011, FY 2012 is the first year of overall educational funding contraction since Deltek began gathering data in 1987. Clearly, this significant state budgetary milestone is not lost on the business community; states need solutions to help make ends meet.
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