Estimating the Impact of the Proposed Education Jobs Fund

Last week, Ed Money Watch wrote about the resurrection of the Education Jobs Fund, a proposed $23 billion fund to help states maintain both their K-12 and higher education labor forces. The bill, proposed by Senator Tom Harkin (D-IA), is nearly identical to a similar program passed by the House in December of 2009. These additional funds could be key to keeping teachers in classrooms over the next two fiscal years. To better understand the potential effect of this program on education jobs, the Education Commission of the States (ECS) released a report estimating the number of jobs that could be saved or created by the Education Jobs Fund legislation pending in Congress. While their analysis presents some valuable findings, it lacks some nuance on the spending practices of the states. As a result, Ed Money Watch has recreated their analysis with some important tweaks.

The ECS report’s author, Michael Griffith, first distributed the $23 billion in Education Jobs Funds that would be distributed under the proposed bill among the 50 states, the District of Columbia, and Puerto Rico according to the same distribution method as the existing federal program that is supporting education job costs called the State Fiscal Stabilization Fund (share of school age and total population). Then he divided each state’s amount of funds into a pot for K-12 and a pot for public institutions of higher education (IHE). He based this calculation on a three year average breakdown of total state spending on K-12 and higher education (77 percent for K-12 and 23 percent for IHEs). Finally, he divides both the K-12 and higher education allocations by average instructor salaries plus benefits in each sector to determine the estimated number of jobs that could be saved with the funds. In the end, Griffith concludes that the Education Jobs Fund could save around 256,000 K-12 jobs and 51,000 higher education jobs.

While the ECS calculations provide a clean, back-of-the-envelope approach to the effect the Education Jobs Fund could have on education employees, they do not recognize the variation in state spending between K-12 and higher education. To better account for these differences, Ed Money Watch recreated this analysis using data collected from the State Fiscal Stabilization Fund Phase 1 application each state submitted to the U.S. Department of Education.

Specifically, the application required that each state report how much of their State Fiscal Stabilization Funds (SFSF) they would spend on K-12 and higher education in 2009 and 2010 separately. We used this information to find the total percent of SFSF monies allocated to K-12 and higher education in each state. This provides a better indicator of potential distributions of Education Jobs Funds than the national average data ECS uses.

However, this method has one complication. Some state SFSF applications report SFSF monies remaining in 2011. Because these funds would be distributed directly to K-12 school districts via Title I funding formulas in 2011, we counted any reported remaining SFSF funds for 2011 in the K-12 allocation for each state. As a result, our analysis shows that eight states, including Alaska, Connecticut, Maryland, and Texas, would allocate 100 percent of their SFSF, and therefore Education Jobs Funds, to K-12.

Using these revised K-12 and higher education distributions for each state, we divided each by average instructor salaries plus benefits in each sector to get total jobs saved or created. For the K-12 salary data, we used 2009-10 estimates of average teacher salaries in each state plus 22 percent for benefits. This is the same data used in the ECS report. However, for the higher education salary data, we used national average compensation for instructors in public institutions for 2009-10. ECS used data from 2008-09 instead.

Our calculations resulted in dramatically different results than the ECS calculations.

Under our method, at least 17 states would spend more than 23 percent of their Education Jobs Funds on higher education. At the same time, however, 15 states would spend less than 10 percent of those funds on higher education. Overall, average spending on higher education would be 17.2 percent. Additionally, the 2009-10 data on average instructor higher education salaries ($100,349) is slightly higher than the 2008-09 data. As a result, we found that the proposed Education Jobs Fund would save approximately 36,600 higher education jobs, about 14,000 fewer than ECS’s calculation.

At the same time, we found that the proposed Education Jobs Fund would save nearly 271,000 K-12 jobs, about 15,000 more than ECS did. This is because 32 states reported that they would spend more than 77 percent of their SFSF monies on K-12 education, resulting in an average of 82.7 percent of spending on K-12. This means that states are likely to allocate more Education Jobs Funds to help save K-12 jobs as well.

Both our analysis and ECS’s are far from perfect. As states begin to finalize their 2010-11 budgets and better understand projected deficits in the coming years, the relative need for federal support in K-12 or higher education could shift significantly. Regardless of those changes, it is clear that the Education Jobs Fund could save or create a significant number of jobs in K-12 and higher education if it makes it through Congress. In the last few weeks, states have been pink slipping thousands of teachers and other staff, threatening to cut programs, and considering shortened school weeks. The Education Jobs Fund may be the only way to keep those worse-case scenarios from becoming reality.

Click here to download a PDF containing these data for all 50 states and the District of Columbia.