Maine’s School Budget Validation Process Saves Tax Dollars

Read the full report | Today, Maine’s Legislature will begin debate on LD 1739, “An Act To Remove the Requirement that the Annual Budget of a Regional School Unit Must Be Approved at a Budget Validation Referendum.” This bill, sponsored by seven Republican state legislators and two Democrats, would not only remove from state law the requirement that all school budgets be put out to taxpayers for a referendum vote, it would repeal the budget validation law entirely.

Under current law, most school budgets are first approved by those who are able to attend a district-wide public meeting. That approval is then “validated” by voters through a referendum vote. In this way, those who are unable to attend the district meeting, such as those serving in our armed forces overseas, have an opportunity to make their voices heard. LD 1739 would eliminate the use the referendum process by any school district, and would not even leave it in state law as an option for districts to use. If this bill were to pass, all school budgets would be approved at a public meeting (or by town or city councils in certain districts governed that way), with no public referendum vote allowed at any point in the process for any school district.

Setting aside for a moment the almost unprecedented assault on voting rights that this bill represents, eliminating the requirement that districts submit their budgets to popular vote would be a huge mistake given the state’s ongoing budget crisis. Though it has been in effect statewide for only a couple of years, the budget validation process is doing precisely what it was intended to do, which is to encourage disciplined school budgets that provide tax relief for Maine families.

Chart 1 illustrates the growth of state and local school spending from FY 1999 to FY 2009. For nearly all of that period, education spending by state and local governments grew despite plunging school enrollment. From FY 1999 to FY 2008, total education spending grew from $1.3 billion to $2 billion, an increase of 53 percent. As the current state budget crisis makes clear, continued spending growth of this kind is unsustainable. Yet little that the state has done over the past decade to control rising costs had any real effect until the enactment of the budget validation process, which was first used for the FY 2009 school budgets.

School Budget Validation

For the purposes of this study, we’ll divide the FY 1999 to FY 2009 period into four eras.

Era 1 – FY1999 to FY 2002

During this period of economic growth, total spending on Maine schools rose 19.6 percent. State spending rose by an average of 4.5 percent per year, with local spending growing an average of 5.2 percent per year.

Era 2 – FY 2003 to FY 2005.

During the state budget shortfalls of this period, state General Purpose Aid to Local Schools (GPA) rose less than one percent per year, climbing only 2.7 percent over the period. Spending by local governments rose nearly four times faster, however, growing at an average rate of 3.5 percent per year. Local districts, it is important to realize, continued to increase spending at a significant rate despite budget shortfalls at the state level.

 Era 3 – FY 2006 to FY 2008.

Responding to public demands for relief from the high property taxes that resulted from increased local spending, the legislature enacted LD 1, which increased state education spending dramatically. Over this three year period, state education spending rose an average of 4.8 percent a year.

As anticipated, local spending grew at a more moderate rate, but still rose at an average annual rate of 1.9 percent. In other words, local spending continued to rise even though the state, by FY 2008, was spending $100 million more per year than it had spent only two years earlier.

Era 4 – FY 2009

For FY 2009, spending at both the state and local level actually dropped, something unseen in the decade previous. From FY 2003 to FY 2005, local governments had continued to increase spending in response to cuts in state aid for their schools, but in FY 2009, they did not. Instead, they actually cut spending.

What changed? Because of the budget validation law, budgets for FY 2009 went to a referendum vote in every Maine school district for the first time. The result was a drop in spending from the year before, despite cuts in state aid.

Did the economic crisis, which begin in 2008, also have an effect? While there were signs of a looming economic downturn  the massive drop in the stock market came in the fall of that year, well after school budgets had been approved by voters and the school year had begun. The real force at work here was budget validation process, which gave voters more say over school budgets than ever before.

In response to this increased level of accountability, school district leaders were more disciplined about their budgets, which resulted in real savings for taxpayers.

Now, that right to vote is in peril, threatened by legislators who would eliminate the budget validation process from state law in its entirety. If Maine is ever to get control of runaway education spending, it must empower Maine voters. LD 1739 does the opposite, and should be defeated.

State and Local Education Funding FY 1998 - FY 2009

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