Utah

State Issues Affecting Education Funding

The current state of education funding in Utah is not as much a result of priorities, year-to-year appropriations, or fluctuations in the taxable base as it is a result of major changes in the tax structure and rates over the past several decades. Tax reform efforts in the 1980s and 1990s resulted in reduced revenue streams for both higher and K–12 education. A constitutional amendment in 1996 changed the flow of money at the state level, allowing lawmakers to use income taxes, formerly dedicated to K–12 funding, to fund a variety of other priorities, including higher education. Similarly, higher education funding remained flat relative to enrollment growth, whereas support for other state initiatives supported by the general fund increased (Utahns for Public Schools 2010).

The effects of these tax reforms may not have been as marked if other significant changes, such as the proliferation of sales tax exemptions and corporate income tax breaks stemming from the 1980s, had not substantially reduced the general tax base. In addition, during the 2007 legislative session, personal income tax was converted into a single-rate, one-track system. Ultimately, the lower effective rate and the abolishment of the brackets reduced the long-term elasticity of the system (Utahns for Public Schools 2010). Further tax reforms in the mid 1990s resulted in major reductions of property taxes primarily by doubling property tax exemptions for homeowners and by cutting the basic levy (Utah Foundation 2011). HB 55, introduced in 2013, would have frozen the basic property tax rate and increased education revenue over time, but it failed.

Finally, demographic changes are having, and will continue to have, a dramatic effect on education funding. Utah has the highest percentage of young adults (ages 18–25) in the nation, is one of the fastest growing states, and is experiencing a rapid shift toward greater economic and racial diversity (Perlich 2011)

Funding Formulas, Trends, and Priorities

According to Wood, a local journalist who follows the legislature, “Lawmakers met the top funding priorities of both public and higher education for the 2013–2014 academic year, leading to a legislative session focused less on dollars and cents and more on a need for long-term planning.” The “top funding priorities” funded by the state legislature included support for student enrollment growth ($69 million) and a 2% increase in the Weighted Pupil Unit. Although higher education did not receive funding to increase capacity, mission-based funding to resolve some inequities across institutions and to promote higher completion rates was funded ($18 million) along with funding requests for retirement and insurance costs. In addition, through a one-to-one match between the state and higher education institutions, the state appropriated $20 million to promote science, technology, engineering, and math (STEM) education.

Although lawmakers made no major changes to education funding formulas, the 2013 legislative session did see some important policy changes that may have implications in subsequent years. Senate Bill 169 created a legislative task force to “review and make recommendations on public and higher education issues.” The task force is with the identification of the education policies necessary to support a healthy economy, create a seamless integration between the K–12 and higher education systems, and establish long-term priorities for education funding. Furthermore, the task force is to “consider … issues of equity, local replacement funding, taxation, formula development, distribution, transparency and growth.”

In 2010, Governor Herbert created the Education Excellence Commission with a charge to create a long-term plan for education. The commission set a goal for all Utahns to have some form of postsecondary degree or certificate by 2020. A legislative resolution (SCR5) in 2013 supported the goal. The commission’s work is also supported by a business coalition, Prosperity 20/20. The combined efforts of these groups have created enthusiasm for increased education funding, but so far the objective has not been realized.

Impact on Higher Education and District Funding

Utah is ranked last in the nation in K–12 per-pupil funding, spending $6,326 or about 59% of the national average...