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MEDICAID COSTS, SHRINKING BUDGETS COULD SQUEEZE EDUCATION FUNDING; STATE OF THE STATE ADDRESSES REFLECT FUNDING NEEDS

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"To keep our competitiveness in the world marketplace, we need brain power, and that comes from improving our early education in our schools and our universities. A lot of that is state funding," Senator Lamar Alexander (R-TN) said

At a hearing on Capitol Hill earlier this month, several U.S. senators expressed concern that increasing Medicaid costs and federal funding mandates could start to squeeze state budgets, ultimately resulting in less funding for K-12 education and other traditional state responsibilities.

“To keep our competitiveness in the world marketplace, we need brain power, and that comes from improving our early education in our schools and our universities. A lot of that is state funding,” Senator Lamar Alexander (R-TN) said during a Senate Budget Committee hearing with OMB Director Joshua Bolten. Alexander noted that when he was governor of Tennessee fifteen years ago, 51 cents of every dollar went to education. Today it is 40 cents, a decrease he attributes to the rising costs of Medicaid.

As governors continue to report on the state of their states, several expressed concern about the budget constraints, led by increasing Medicaid costs, that are frustrating their efforts to increase funding for education programs. Some governors have begun to look for other funding streams to pay for increases in education funding.

In Kentucky, Governor Ernie Fletcher (R) noted that the number of Medicaid recipients exceeds the number of students in public schools. In asking the state legislature to pass a tax modernization plan, which he called “JOBS for Kentucky,” Fletcher said the plan would provide “more revenue for the current budget cycle without raising taxes” and “provide for dynamic growth” for Kentucky’s economy in the years to come. Of the money generated by the tax modernization plan, Fletcher would spend $35 million on primary and secondary education, $10 million on Kentucky’s flexible teacher pay program, and an additional $10 million to help restore funding cuts in postsecondary education.

“Currently, too many of our best and brightest college graduates leave Kentucky every year,” Fletcher said. “We raise, train and educate them only to benefit employers in other states. My vision for Kentucky is a Commonwealth where there is so much economic opportunity, and our quality of life is so high, that people who are born here can stay here, and people who aren’t fortunate enough to be born in Kentucky, can look forward to locating here.”

Utah Governor John Huntsman (R) took a different route in linking the state economy and education in his address, saying that a focus on economic development is “vitally important” because it will provide Utah with the resources necessary to pay for a “world-class” education for the state’s students.

He also talked about the need to empower teachers and keep them in the classroom. He called for an increase in teacher pay for those who perform well and higher pay for beginning first-year teachers. In order to attract more college graduates into the teaching profession, Governor Huntsman proposed offering incentives such as low-interest loans for teachers who agree to teach in hard-to-staff locations. To keep more teachers in the classroom, the governor would encourage veteran teachers to mentor new teachers and share their best practices.

In Maryland, Governor Robert Ehrlich (R) asked the state legislature to consider a “fully phased-in slots program” that could generate more than $800 million in annual new revenue for the state and help meet the recommendations made by the Thornton Commission, a twenty-two-member panel established by the Maryland General Assembly to help make decisions about how the state should finance public education. In 2001, the commission recommended a $1.1 billion increase in school aid over the next five years in order to help every student meet Maryland’s achievement standards. According to Ehrlich, the slots program could “help pay for mandated increases in educational spending pursuant to the Thornton formula, and new school construction so desperately needed in every subdivision.”

Links to completed State of the State addresses are available at http://www.stateline.org/stateline/?pa=issue&sa=showIssue&id=422881.

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