JEFFERSON CITY — On Wednesday, the state’s Department of Elementary and Secondary Education (DESE) presented its application for nearly $750 million in federal funding to the state Senate Committee on Education. The program, “Race to the Top,” is a federal competitive grant program that will distribute $4.35 billion to states for the purpose of education reform.

Of the $743 million the state has requested, $355 million will go directly to public school districts, Chris Nicastro, DESE Commissioner of Education, said. The bulk of the remainder, about $272 million, is set to pay for providing broadband Internet access to all of the state’s public school districts.

The 299-page application can be read online here.

The grant program is intended to encourage states to adopt standards and assessments that allow students to succeed, to build data systems that track student performance, to recruit and retain the most effective teachers, and to create programs that will help “turn around” lowest-achieving schools.

Interestingly, Nicastro said that the reforms outlined in DESE’s grant application would be put in place regardless of the amount of money awarded to the state.

“We do intend, with or without this grant, to use the work we’ve put in and the application as a framework for redesigning the department itself and for driving educational reform in Missouri over the next decade,” Nicastro said.

She continued, "we do believe the plan will serve as the catalyst to propel Missouri’s public education system into the Top 10, nationally and internationally, and that is our goal.”

Some of the following reforms have been outlined in the application:

• Adopting and implementing cross-state standards for curriculum and testing;
• giving MOBroadbandNow broadband Internet access to all school districts;
• developing web-based teacher quality databases to effectively monitor successful teaching practices;
• evaluating teacher performance based on student performance;
• developing assessment methods at the state level;
• creating teams to intervene quickly in failing schools;
• and, allowing the state education board to close failing charter schools.

During a brief question-and–answer period, senators mostly asked questions about how the proposed reforms would affect charter schools.

Sen. Scott Rupp (R-Wentzville), said he was concerned that DESE’s application didn’t remove the geographic limitations placed on charter schools, which can currently operate only in Kansas City and Saint Louis.

Others asked about how charter schools would report student academic performance.

“We’ve not been as we transparent about reporting the performance of charter schools as we should be,” Nicastro said. She added, however, that “Race to the Top” would make more information available, and would help make charter schools more accountable.

Nicastro was referring in part to legislative proposals that tweak charter school statutes, which DESE recently submitted to Missouri's General Assembly.

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JEFFERSON CITY — During the past month, Missouri tax revenues continued to fall short. According to Linda Luebbering, state budget director, revenues were down more than $170 million in December 2009, as compared to December 2008. The slide amounts to a 21.7-percent decrease.

Despite the most recent decline, state officials say they expect tax revenues to bounce back slightly during the next fiscal year.

A joint forecast made by the governor’s office, state budget leaders, and financial experts predicts a slight increase in general revenue collections for fiscal year 2011, above those in fiscal year 2010. According to that forecast, the Consensus Revenue Estimate (CRE), general revenue collections are expected to be $7.223 billion. This would be a decrease of $780 million from actual revenue collections from fiscal year 2008.

State revenues collected from individual income taxes, corporate income and franchise taxes, and sales and use taxes were all down in December by 26.5 percent, 13.5 percent, and 1.8 percent, respectively.

The only increase in revenue came from liquor sales, which saw a 10.25-percent increase. Liquor sales have generally remained stagnant or have increased during recent months, although beer revenues declined by 6.71 percent. (See a detailed spreadsheet here.)

In addition to the falling numbers for December, the general revenues for the 2010 fiscal year to date have declined 10.6 percent for the same time during the 2009 fiscal year, from $3.7 billion last year to $3.3 billion this year.

Legislators responsible for the state’s budget, such as Senate Appropriations Chairman Rob Mayer and House Budget Chairman Allen Icet, have repeatedly warned the state to prepare for reductions in spending in order to maintain a balanced budget. In recent months, officials have cut hundreds of millions from the state budget, and may soon cut more.

Gov. Jay Nixon will announce budget details for his fiscal year 2011 at the State of the State address on Jan. 20.

Andrew Guevara is a student at the University of Missouri–Columbia.

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Missouri capitol building in Jefferson City.

COLUMBIA — On Monday night, Sen. Kurt Schaefer (R-Columbia) told the Columbia Board of Education that more cuts to the state budget seemed certain, and that the steep decline in state tax revenues would likely affect funding for public schools.

“I don’t know the public really has a full understanding of how difficult of a budget situation we’re in,” he said.

According to Schaefer, who is vice chairman of the Senate Appropriations Committee, general tax revenues were down 6.9 percent for fiscal year 2009 and are down 10.8 percent for the current fiscal year. The percentage declines translate to about a $500 million revenue loss in fiscal year 2009, and at least another $500 million by the end of this fiscal year.

The state last saw such a decline during fiscal years 2002 and 2003, when the state’s general revenue fell $463 million for both years and then rebounded, Schaefer said.

Schaefer said that the Department of Elementary and Secondary Education (DESE) has this year requested $105 million in order to fully fund the amount of money that the state promises each year to local school districts.

Jan Mees, board president, asked whether there would be any more state withholdings from the budget.

There likely would be, Schaefer said. He said that Gov. Jay Nixon’s cuts seemed to be based on the expectation of a 4-percent decrease in revenues for the year, but pointed out that revenues will likely fall short even of that decline. The state seems poised for a 7-percent decrease for the current fiscal year, he said.

“What can we as a school board do other than to continue to lobby our legislators?” asked district Chief Financial Officer Linda Quinley.

So far, Schaefer said, the best testimony given during the senate appropriations hearings came from experts who knew how money could be spent the most effectively. Also, he said, school districts should show legislators how they have already cut their budgets.

Schaefer said that for him personally, K–12 education and higher education are priorities when drafting the state’s budget.

But, he said, “I don’t think that anybody should be under the illusion that these cuts aren’t going to be painful, because I think that they’re going to be very painful for people. Our job in the General Assembly is to make sure that the cuts that are going to be made are the least negative and the least harmful cuts that can be made.”

Andrew Guevara is a student at the University of Missouri–Columbia.

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On Tuesday, the Senate Appropriations Committee met to hear another round of public testimony from government agency spokesmen. Faced with a considerable tax revenue shortfall, state legislators will likely need to make budget cuts for the coming fiscal year. During the second day of public testimony, however, the committee heard the same message it had heard the day before from government agency representatives: Don’t make additional cuts.

On Tuesday, representatives from the Department of Mental Health, the Department of Health and Human Services, the Department of Social Services, the Department of Social Services, the Department of Public Services, the Department of Public Safety, the Department of Economic Development, the Judiciary, and the Office of the Public Defender had signed up to testify before the committee. About 65 people were set to testify before the committee for Tuesday with a few spillovers from Monday. Before the lunch recess, more than 25 people or groups had testified.

The morning testimony was filled with personal stories from former alcoholics, drug abusers, persons with disabilities, parents of children with developmental disorders, and others attempting to spare their respective programs from budget cuts.

However, committee members continued to focus on reducing the state budget. “The cuts are coming, really no one is going to be spared,” said Sen. Jim Lembke (R–Saint Louis).

At one point, Sen. Scott Rupp (R-Wentzville) asked, “Where would you point us to look to cut costs?”

Some people, such as Wendy Sullivan, president of Life Skills, urged funding cuts from existing facilities, such as the Bellefontaine Habilitation Center in Saint Louis, and downsizing state rehabilitation centers. Others, such as Dan Buck, CEO of the St. Patrick Center in Saint Louis, pointed to state tax credits.

Sen. Tom Dempsey (R–Saint Charles) said it was possible that the state could reconsider existing historical preservation and low-income housing tax credits.

Others offered ways to increase state revenues. Wayne Lee, a disability advocate, recommended that the state streamline taxes, while Gerrit DenHartog, a lobbyist for addiction rehabilitation organizations, advised an alcohol tax increase.

“The federal government doesn’t have any money. They’re borrowing from China. Their bubble is about to burst,” said Lembke, by way of advice to the St. Patrick Center and other organizations facing state funding cuts. “Let’s look to each other instead of government.”

Andrew Guevara is a student at the University of Missouri–Columbia.

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With state tax revenues down 10.8 percent during the first quarter of the 2010 fiscal year, compared with the first quarter of 2009, experts predict that collections will continue to slide. This decline comes in addition to a 7-percent decrease seen during the previous fiscal year.

Gov. Jay Nixon responded to the decline in state tax revenues in October with $200 million in budget cuts, based on a projected decrease of 4 percent for the entire year. However, some experts predict that the actual rate for the fiscal year could be between 6 and 8 percent, and foresee further cuts in January.

“The state budget is dramatically out of balance, the only thing that is keeping it in line are the federal stabilization dollars. Once those dollars are gone, everything will be impacted,” said James R. Moody, principal of James R. Moody and Associates, former state director of Missouri’s Office of Administration, and former state budget director.

Missouri began receiving budget stabilization funds from the federal government during fiscal year 2009. The Missouri Budget Office reports that the state will receive $2.32 billion total in federal stimulus dollars, with the money set to run out during fiscal year 2011. Of the $1.35 billion that the state will receive during the current fiscal year, $164 million will be used to balance the budget.

With an estimated decline of 7 percent for this fiscal year, Moody said he predicts that the state’s net general revenue will be $6.93 billion, falling more than $1 billion short of state operating expenses of $8.58 billion.

Amy Blouin, executive director of the Missouri Budget Project, attributes the decline in state revenue to the economic recession and to tax credits and tax cuts made in recent years.

According to Blouin, state tax credits have grown from $365 million in 2006 to $585 million in 2009, a 60-percent increase, while tax reductions have grown to about $325 million per year, combining to more than half of a billion dollars per year in additional costs.

Moody forecasts that drastic cuts will occur when the federal dollars run out unless a second federal stimulus package is created.

When asked whether there was a way to reverse the decline in state revenues, Moody said, “The revenues from income tax withholding have been very negative. I don’t think this will be changing very quickly. It’s a reflection on how many people are working.” He continued, “The state pretty much has to make draconian cuts. “

But Blouin recommends that the state needs to modernize its revenue structure. One way that the state could do that, she said, is to expand the items subject to the state sales tax.

“Currently, the state doesn’t collect tax with purchases made on the Internet,” she said. “Missouri and every other state is losing sales tax over the Internet. The University of Tennessee estimates it cost the state about $200 million per year.”

Moreover, she continued, “Some of the tax breaks that we give to certain sectors of the population are outdated. The timely filing discount, a tax reduction given to companies for paying taxes on time to offset the cost for filing and accounting in past decades, is one example. We are the only state that still does that.”

With Nixon predicted to make cuts to the state’s budget, the General Assembly is making plans to address the issue of how to balance the state’s budget.

“We don’t have any silver bullet to make this go away,” said Rep. Ron Richard (R-Joplin), speaker of the Missouri House of Representatives. He said he plans to continue meeting with Rep. Allen Icet (R-Wildwood), the state budget chairman, and other members on the legislature until the end of the year to try to alleviate the problem.

Icet was not able to be available for comment.

On Dec. 7 and 8, 2009, the Senate Appropriations Committee will hear public testimony on how to allocate the state’s funds for the upcoming year.

Andrew Guevara is a student at the University of Missouri–Columbia.

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State tax revenue collections continue to fall short. For October 2009, collections were down 14 percent compared with October 2008, falling from $514.8 million to $442.7 million, according to State Budget Director Linda Luebbering. A spreadsheet detailing the most recent tax collections is available here.

State revenues collected from corporate income and franchise taxes, sales and use taxes, and individual income taxes were all down, by 26.2 percent, 24.4 percent, and 8.6 percent, respectively.

The declines are in addition to the already waning numbers that were seen in September, when the state made its first-quarter report for the fiscal year, and announced that total collections were down nearly 10 percent in comparison to the first quarter of the previous fiscal year. With the additional shortfall in October, total collections are now down 10.8 percent. The decline seen so far is much less rosy than the revenue projects used in the state budget, which anticipated a 1-percent growth in tax collections.

In response to the continued decline in state tax revenues, Gov. Jay Nixon made $200 million in budget cuts during late October, an amount that comes to about 1 percent of the state’s total budget.

Contrary to the decreasing trend, tax collections from liquor sales were up 6.5 percent for October, and 7.6 percent for the year so far.

Andrew Guevara is a student at the University of Missouri-Columbia.

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