How much does California spend on education and where does that rank the state against other states? This is a question often asked by policy makers and the answer usually comes in the form of a ratio of spending per pupil. Compared to other states, California's per-pupil investment in education has appeared somewhat low, ranking 37th highest by the National Education Association (NEA), whose numbers are often used in legislative debate and cited in many reports by prominent public and private organizations.

In June, the Legislative Analyst's Office (LAO) was asked to report to a budget committee on California's per-pupil education spending, and the figures reported by the LAO differ significantly from the NEA report, showing California spending $5,789 per pupil during the current fiscal year. This ranks California at 29th highest against the 50 states - much closer to the national average than previously reckoned (see table on page 7). The new figures cited by the LAO were compiled by the National Center for Education Statistics (NCES), a data center within the U.S. Department of Education.

K-12 Education Spending 1997-98 Estimates       State Per Pupil   Spending     Rank New Jersey $9,577 1 New York 8,898 2 Connecticut 8,720 3 Alaska 8,461 4 Delaware 7,840 5 Pennsylvania 7,670 6 Massachusetts 7,506 7 Rhode Island 7,360 8 Wisconsin 7,045 9 Michigan 6,800 10 Washington 6,663 11 New Hampshire 6,548 12 Illinois 6,460 13 Oregon 6,436 14 Vermont 6,398 15 Wyoming 6,368 16 West Virginia 6,341 17 Maine 6,327 18 Minnesota 6,292 19 Indiana 6,115 20 Maryland 6,021 21 Ohio 6,020 22 Montana 5,994 23 Iowa 5,988 24 Idaho 5,966 25 Nebraska 5,949 26 Nevada 5,916 27 Texas 5,851 28 California 5,789 29 Kansas 5,668 30 Virginia 5,571 31 New Mexico 5,486 32 Florida 5,484 33 Hawaii 5,384 34 North Dakota 5,214 35 South Carolina 5,204 36 Missouri 5,075 37 Oklahoma 5,071 38 North Carolina 4,983 39 Georgia 4,948 40 Colorado 4,946 41 South Dakota 4,581 42 Arizona 4,579 43 Alabama 4,499 44 Louisiana 4,484 45 Kentucky 4,442 46 Tennessee 4,322 47 Mississippi 4,231 48 Arkansas 4,078 49 Utah 3,941 50 Source: National Center for Education Statistics

"With the investment California has made in the last few years, you're starting to close the gap," Legislative Analyst Elizabeth Hill told the Legislature's Budget Conference Committee. She noted that the state was about $342 below the national average, not the nearly $1,000 gap that many had been citing from NEA figures.

Why the difference from NEA figures? The NEA computes per-pupil spending by using the average daily attendance (ADA) reported by each state's department of education. California, unlike any other state, includes excused absences in its attendance counts. Counting excused absences inflates California school enrollment rates, making the state appear to spend less on students when compared to other states. However, the NCES statistics, according to the LAO, are based on data that are more comparable across the 50 states.

Lisa Martin is Cal-Tax legislative coordinator and this summer will complete her master's degree in public policy and administration.

(Cal-Tax Research Director Stephen Kroes contributed to this report.)

State Schools Superintendent Delaine Eastin was critical of the numbers when they were released. Ms. Eastin, who embraces NEA's per-pupil statistics, indicated that, among other things, the NCES' numbers unfairly include educational programs relating to preschool, the California Youth Authority and state hospitals.

However, Legislative Analyst Hill said, "We are very comfortable with the numbers. We had some concerns about the National Education Association's numbers," emphasizing the discrepancy in counting excused absences. According to Ms. Hill, this treatment of attendance figures by the NEA had the effect of understating California's per-pupil expenditures by around 5 percent or $200 per student. The data from the NCES do not suffer from this inconsistency across states.

In addition to examining California's current-year spending compared to other states, it is also instructive to see how California's spending has changed over time. The accompanying graph (see page 6) shows inflation-adjusted K-12 per-pupil spending since the mid-1970s. Past amounts are adjusted to equal 1997 dollars. Current education spending is at its highest level, about 12 percent above the highest level of the 1970s.

The graph shows that per-pupil spending dipped significantly following the 1978 passage of Proposition 13 and the effects of a recession in the early 1980s. Spending then rose at a healthy pace until the 1990s recession caused declines. Rapid state revenue growth of the most recent two years led to large increases in the education budget, including class-size reduction efforts, that have pulled education spending out of the 1990s decline to all-time high levels.

Data for both the table and graph were obtained from NCES. Inflation adjustments were made by Cal-Tax from data supplied by the state Department of Finance. We thank these agencies for their assistance.