Charlie Harper: State Budgets New Money For Teacher Retirement – Not Much Else

Charlie Harper

Tuesday, January 16th, 2018

For Governor Deal, last week’s State of the State address was the show, but the release of his budget plan was for the dough. The Office of Planning & Budget has released the Governor’s budget request for FY2019, which begins July 1st.  It outlines plans for an expected $26 Billion in state revenue.

The document begins with a three-page intro letter from the Governor, which has a nice comparison between the budget the state faced when he took office and the one he prepares to leave as his last. Because education is always the highlight in the press and politically (as well as representing half of all state spending), I’ll highlight his words on the K-12 portion of education here:

“Our greatest resource is our people, and investing in the education of our youth to help them prepare for the jobs of tomorrow is the soundest investment we can make. In 2011, plummeting revenues had meant steep cuts across the budget, including to our K-12 and higher education systems. Our lottery funded programs had become financially unsustainable. Since 2011, we have restored $2.7 billion to our K-12 systems, including $59 million in FY 2019…The FY 2019 budget also includes an additional $361.7 million for the Teachers Retirement System to fully fund the actuarially determined employer contribution to keep our pension system on sound footing and ensure the state can meet its future obligations to those who have dedicated their careers to serving the educational needs of our children.”

A lot will be made of the fact that money for local systems to provide raises to K-12 teachers is not proposed. This does not mean that “teachers get nothing”. Their defined pension plan alone required an additional third of a billion dollars this year above normal contribution levels to keep it actuarially sound.  That’s the largest amount of money in year over year revenue growth, dedicated to teacher compensation.

Much of the increase to education spending this year outside of pensions will involve transforming and expanding the Technical College System of Georgia.  It is taking over the role and offices of Workforce Development, and is now squarely at the center of outcome based/results focused career education in Georgia.  The part of the same graph above that was truncated is below with those details:

“The FY 2019 budget also includes $1.8 million to add 226 new scholars to the REACH Georgia Scholarship program and expand the program. It also adds $60 million to our higher education systems and transfers the Governor’s Office of Workforce Development to the Technical College System of Georgia to further enhance the education to workforce pipeline. Our lottery system, which had reserves of $360 million at the end of FY 2010 and which were quickly depleting, today has minimum required reserves of almost $549 million while continuing to keep our promise of providing a quality pre-kindergarten education to 84,000 of Georgia’s 4 year olds and merit-based scholarships and grants to help Georgia’s best and brightest afford a quality higher education.

Other budget highlights include:

Medicaid funding is increased by more than a quarter billion dollars.

HOPE scholarship payouts are increased by 3%, for a cost of $68 Million.

Approximately $45 Million is added for various additional and expanded mental health services.

$7.5 Million in bond funds will allow for construction of a pedestrian mall at the GWCC where the Georgia Dome once sat.

For the third year, $100M in bond funds are recommended to provide road and bridge repair/replacement per 2015’s transportation funding guidance.

Most of the other “bells and whistles” are projects at the University System and the Department of Natural Resources funded by bonds.

The takeaway is this: While you’ll hear the usual suspects talk about the state “giving away” a billion-dollar surplus, a billion dollars of revenue growth on a $25 billion budget is just 4% annual growth. When you consider the cost of inflation and population growth of about 1% per year, there’s not a lot of new money left to maintain existing programs. What was left over this year after paying for higher school enrollment, higher costs of providing health insurance for state employees and Medicaid, etc, is proposed to shore up the Teachers Retirement System of Georgia and provide some much needed support to long neglected programs in the Department of Behavioral Health.

Charlie Harper is the publisher of and the Executive Director of PolicyBEST, which focuses on policy issues of Business Climate, Education, Science & Medicine, and Transportation.