The Indiana State Budget Agency recently released the revenue collections report for October. The overall collections for the fiscal year now stand 2.8% ($136 million) below projections; not good, but not critical at this juncture.
The troubling numbers for the revenue watchers are the corporate tax collections. They were down again this month and are now at 52% below the April revenue forecast projections. Nobody really knows how to fully explain the drop. While the corporate collections historically fluctuate widely from month to month and are the hardest to predict for many reasons (that are not directly related to predictable economic activity), the gap between projections and collection is extraordinary. Fortunately, corporate collections have never represented a big piece of the pie (only around 6%) when compared to sales (48%) and individual income (36%) tax collections. Still, the unforeseen drop accounts for $126 million of the $136-million-dollar shortfall.
The State Budget Agency has drilled down on the matter and is attributing it to a high volume of refunds. But what is triggering the refunds is not clear either. Sometimes refunds can cover a number of years. They could be tied to a recent settlement of numerous cases or result from changes in the law – lots of possible factors. Whatever they are attributable to, they probably don’t mean that corporate collections will stay down; they are likely to rebound over the balance of the fiscal year and smooth out the impact, but they are not likely to recover to the total of the original projections. Let’s hope this is just a temporary mysterious dip that is evened out over time.
For those interested, you can review all thenumbersand commentaryfrom the State Budget Agency.
Getting more of the education dollars into the classroom has been a constant theme for Gov. Mitch Daniels and Superintendent of Public Instruction Tony Bennett. But in July, the State Budget Agency released a report that indicated Hoosier districts spent an average of 57.8% in the classroom in the 2008-2009 school year, a decrease from 60.6% the previous year.
These numbers always come with controversy. Districts themselves are much more generous with what qualifies as a classroom expenditure, so their numbers can often dramatically differ from what a government or independent review will find. The goal of 65% into the classroom is also not without dispute.
What makes this interesting at this time is that a Pepperdine University review of California education spending from 2003-2004 to 2008-2009 found that direct classroom expenditures statewide went from 59% to 57.8%. Yikes, we’re tied with California. When it comes to money and expenditures, that can’t be a good thing.
A couple of other nuggets from the Pepperdine report (where they evidently do have more than surfing as a major; really, it must be the college campus with the most scenic views):
School spending increased by 25.8% per capita during the five-year period. So much for all that talk about spending cuts
Teacher salaries and benefits accounted for 48% of spending, a lower number than I would have anticipated
The president of the California Foundation for Education and Commerce stated: "If California had the extra $1.8 billion that went to things other than teaching, we might have been able to hire more than 22,000 teachers statewide."