Journal of Education Finance

funding priorities/trends for p-12 and/or higher education

Arkansas is a very-low-income state. Using most measures of income, Arkansas is regularly ranked as one of the three poorest states in the nation. In 1945, Arkansas passed the Revenue Stabilization Law which limits the ability of the state to have budget deficits and basically requires the state to have a balanced budget. Due to the coronavirus pandemic, in March 2020 the governor announced the state anticipated a $353 million revenue shortfall. As a result, the state cut funding to public schools by $121 million during the spring of 2020 and cut higher education by $42.4 million. Employees were furloughed, travel was reduced or eliminated, and supply budgets were slashed. Educational leaders began developing significantly reduced budgets for FY21. Fortunately, the state of Arkansas fared better than expected during the last quarter of the fiscal year (FY) and ended the year with $360 million more than anticipated.

In the April fiscal session, the General Assembly approved a $5.89 billion general revenue budget for FY 2021. The state's April forecast for FY 2021 would provide $5.68 billion for that budget and leave $212.2 million of the budget unfunded. The impact on public school and higher education is unclear at this time; however, the governor committed to restoring the cuts to public schools and higher education for FY 21. He has also emphasized the cuts to the Medicaid program will be restored.

changes to the funding for p-12 and/or higher education

In the most recent legislative session, the Legislature increased the per-student foundation funding from $6,899 to $7,018 per student for the 2020-2021 school year for public schools. The state also increased funding in several categorical areas by approximately 2 percent. Generally speaking, about half of school district/charter school operating revenue comes from state sources, about 40 percent is generated locally and about 10 percent comes from the federal government. With a $212 million deficient in the proposed state budget, it is unclear how much, if any, impact this will have on public school and higher education funding at this time. Current allocations show an increase in funding to public schools but a 3.5 percent decrease in funding to higher education for FY 21.

pressing state issues affecting p-12 and/or higher education funding

Because of the Revenue Stabilization Law, Arkansas does not maintain a budget surplus, or rainy day fund, like most states. As a result, adjustments must be made during the [End Page 249] FY in which shortfalls occur. These impact all aspects of government, including public schools and higher education.

Teacher salaries are an issue impacting many districts in the state, especially in the rural areas. The legislature has mandated minimum teacher salary of $33,800 for FY 21, $34,900 for FY 22, and $36,000 for FY 23. In addition to the increase in minimum salaries, the district's share of health insurance premiums and teacher retirement contributions have increased for FY 21.

Another reduction in state income, albeit relatively small, is the Homestead Property Tax Credit which will increase from $350 to $375. The impact to schools should be relatively small. The continued uncertainty of the economic impact of the COVID pandemic is a concern for public school and higher education administrators as they plan for FY 21 and beyond.

alternatives to traditional public schools offered by the state

In Arkansas there are two basic types of public charter schools, an open-enrollment charter school and a district conversion charter school. Currently, approximately 40 charter schools exist in the state enrolling 30,000 students. The state is currently providing $7,575,000 for charter schools.

p-12 per-pupil expenditure

$10,229

allocation of state dollars and percent of the state budget for p-12 and higher education

$823,625,572-Higher Ed (14 percent) for FY 21

$1,927,097,296-P-12 Ed Foundation Funding (33 percent)

$ 5,890,000,000-State Budget [End Page 250]