UPDATED 6/08/11 1 p.m.

The early word from the Legislature after the session ended was that Hawaii public schools took a $16.4 million hit in next year’s budget.

The Hawaii State Board of Education on Tuesday will consider a recommendation by Superintendent Kathryn Matayoshi on how to spread those cuts.

But the focus on the $16.4 million could give the Hawaii public an incomplete impression about overall spending on K-12 education, which is actually going up.

Sound confusing? Education spending is complicated and can be looked at a number of ways. To clarify the picture, first we’ll explain what the Department of Education says has happened with spending for next year. Then we’ll add spending that is not controlled by the department but goes toward public education.

The department’s budget for fiscal year 2012, beginning July 1, is $1.74 billion, down $17 million from this year’s total of $1.76 billion. That’s why the board will be wrestling with how to make cuts Tuesday.

Matayoshi said those cuts “will reduce the amount of funds that are distributed to schools, and this will have a negative impact on schools as they will have less to operate with, including funding for positions.”

That’s true. But the focus on the relatively small cut, roughly 1 percent of the total budget, obscures the overall increase in spending on K-12 education. Total spending isn’t actually going down.

It’s going up by $74 million next year, from $2.46 billion to $2.54 billion. That’s a 3 percent increase in total K-12 spending.

The change is driven by increases in the cost of benefits such as health insurance and pensions, growth in the number of charter students and higher debt service costs.

To be clear, the department isn’t doing anything out of the ordinary in the way it presents its budget. The department is just following standard state budgeting practices when it excludes debt service and the cost of benefits.

In the education department’s view, the best comparison is one that shows the education spending over which it has control, because it says that money most directly affects the classroom and students.

And the department points out that that there’s still a lot of uncertainty hanging over what it considers its budget. The outcome of ongoing labor negotiations and what Gov. Neil Abercrombie decides to cut to achieve $50 million in government-wide savings mandated by the Legislature could further reduce the department’s bottom line.

The budget for next year is based on the premise that all union employees will follow the Hawaii Government Employees Association and agree to a 5 percent pay cut. That would be about $59 million. If that doesn’t occur, the board could have to cut more. If the department has to absorb its share of the governor’s cuts from the general fund, it would be about $15 million.

Budget Figures Hard to Decipher

While the district typically has used a $1.65 billion spending total for the current year, in fact the appropriation was bolstered by an infusion from a special state fund and grants from the federal government after the Legislature completed the budget. It actually spent more: $1.76 billion.

The department received $67 million from the Hawaii Hurricane Relief Fund to end furloughs and it received $37.5 million from the federal government under three programs.

FY 2011 Appropriation FY 2011 Actual FY 2012 Change from Actual Percent Change
$1,651,921,473 $1,756,405,353 $1,739,098,253 ($17,307,100) -0.99%*

* UPDATE: Percentage change has been added to all charts.

But the three other education expenses together amount to another $800 million, or nearly half as much again.

FY2011 FY2012 Change Percent Change
Charter Schools $56,597,204 $59,680,071 $3,082,867 5.45%
Employee Benefits $456,323,320 $516,962,335 $60,639,015 13.29%
Debt Service $194,800,000 $223,000,000 $28,200,000 14.48%
Total $707,720,524 $799,642,496 $91,821,972 12.97%

Budget director Adele Chong said the department excludes the charter school funds because it does not actually control or distribute them; they are instead administered by the Charter School Administrative Office. But the 8,200 students in charter schools are public school students. The district has nearly 170,000 students enrolled, not including charter students.

The district excludes the cost of employee benefits because those are paid through the Department of Budget and Finance. The benefits total doesn’t isolate charter school and library employees, another reason why the department doesn’t include it in its overall budget. But they would be a small factor, given that the total budget of the two is roughly 5 percent of the overall education department budget.

The department doesn’t include debt service because those funds are also found in the Budget and Finance budget and are not controlled by the department.

However, because charter schools, debt service and employee benefits costs are all a part of the cost of public education, in the interest of transparency Civil Beat includes those in its budget analysis (as does the U.S. Census).

Education Spending: The Bottom Line

FY 2011 FY 2012 Change Percent Change
Dept. of Education $1,756,405,353 $1,739,098,253 ($17,307,100) -0.99%
Civil Beat $2,464,425,877 $2,538,740,659 $74,314,782 3.02%

Given the complexity of the Department of Education budget, there are several ways to look at its bottom line.

The district’s figure is accurate, but incomplete.

Civil Beat’s approach is also accurate, but may give the impression that the department’s administrators have more leeway than they really do. The pool of funds they actually manage is better reflected by the education department’s number.

However, the amount the public spends on K-12 education is better represented by Civil Beat’s number.

Finally, to put some perspective on the $2.54 billion budget for next year, in the 2007-2008 school year, before the Great Recession occurred, the state spent $2.28 billion on education, including the factors the department says are outside its control (benefits, debt service and charter schools).

The total increase over four years is more than $300 million. Of course there has been inflation during that time, such as increased fuel costs, higher bus contracts, etc.

Recalculating Per-Pupil Spending

UPDATE The U.S. Census just released its estimate for state-by-state per-pupil spending, for the 2009 school year. The census said the per-pupil cost in Hawaii was $12,399[1], ranking the state 11th. Including debt service costs, the total would have been $13,731.

The per-pupil cost, based on overall public spending for education in the 2012 fiscal year, is $14,247. If the Department of Education’s spending figure were used, the per-pupil cost would be $10,231. But that figure doesn’t include employee benefits, debt service or charter schools.

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