A $19-Billion Blind Spot: State Pension Spending

In this brief, we examine an important but obscure form of state spending on K–12 education—state subsidies of school district pension costs. In 2018, this exceeded $19 billion across 23 states. To put that amount into perspective, 2018 federal spending on Title I programs was $15.8 billion. This re...

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Bibliographic Details
Published in:Educational researcher 2020-04, Vol.49 (3), p.220-223
Main Authors: Costrell, Robert M., Hitt, Collin, Shuls, James V.
Format: Article
Language:English
Subjects:
Education
Educational Finance
Elementary Secondary Education
Expenditures
Pensions
Retirement Benefits
School Districts
School finance
State Aid
State budgets
Subsidies
Teacher Retirement
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Summary:In this brief, we examine an important but obscure form of state spending on K–12 education—state subsidies of school district pension costs. In 2018, this exceeded $19 billion across 23 states. To put that amount into perspective, 2018 federal spending on Title I programs was $15.8 billion. This revenue stream is often ignored in analyses of state aid for K–12 and its distribution across districts. Until recently, accounting standards did not require pension plans to report these implicit subsidies to the school districts, so they did not typically know the size of their subsidy. In some important cases, it was missing from state totals for education aid. In the first comprehensive tabulation of these data, we show that this subsidy can be as much as $2,400 per pupil, as it is in Connecticut. In Illinois, it comprises an additional 56% of state spending on K–12 on top of all formula and categorical aid.
ISSN:0013-189X
1935-102X
DOI:10.3102/0013189X20912754