Analysis of the 2008-09 Budget Bill: Education

Adult Education

The budget proposes $722 million for the adult education program in 2008‑09. This is $89 million, or 10.9 percent, below the estimated “workload budget” for the program ($811 million). This workload budget reflects higher spending than in the current year with the addition of $32.2 million for a 4.94 percent cost–of–living adjustment and $18.8 million for a 2.5 percent growth adjustment. Adult education provides education courses in ten instructional areas including basic skills, English as a second language (ESL), vocational education, home economics, and parent education.

Align Funding With Population Growth

We recommend enactment of legislation to modify the growth adjustment formula for the adult education program to reflect the projected increase in the adult population. We also recommend the Legislature fund the program (Item 6110–156–0001) at $30 million below its current–year level to reflect the “excess” growth the program has received over the past four years.

State statute calls for a 2.5 percent growth adjustment for the adult education program each year. This statutory rate was enacted in 1983–84 and has resulted in adult education funding growing considerably faster than the adult population. In the 1980s, the actual growth averaged 2.3 percent, only slightly lower than the statutory rate. In the 1990s, however, the state’s growth slowed appreciably, increasing at an average annual rate of 1.2 percent. Since 2000, the adult population rate has grown by an estimated 1.8 percent on average each year. We project a 1.6 percent growth rate in the budget year.

The difference between these two rates, accumulated over more than two decades, has resulted in the program growing about 25 percent (about $200 million) larger than it would have been if its statutory growth adjustment was set using the increase in adult population. That is, if the actual adult population growth rate had been used in lieu of the statutory rate, the program would be funded at about $600 million in the budget year, instead of $800 million.

Because the program has grown so large, the “excess” growth caused by the statutory rate accumulates into fairly large amounts of additional funding after only a few years. From 2003–04 through 2007–08, for instance, state funding exceeded actual state population growth by a cumulative 4 percent. The cost to the state in 2007–08 of this 4 percent excess growth on the adult education budget was $30 million.

Our review of adult education fiscal and program data over the past few years suggests that the relatively high growth rate is affecting local adult education programs in several ways, including:

• Difficulty Spending State Funds. In 2004–05, about one–half of all adult education programs failed to earn their full state funding entitlement. In 2006–07, 60 percent of programs could not serve enough students to earn their entitlement. In fact, many of these programs are actually shrinking. Under state law, districts lose funding when they do not use it for two years in a row. For about two–thirds of these programs, 2006–07 was the third successive year the programs lost adult education funding because they were not able to earn the amount made available by the state.
• Exploring New Markets for Services. “Innovative” ESL programs have expanded significantly over the past several years, with participation reaching 49,500 in 2005–06, an increase of 40 percent from 2001–02. State law allows adult programs to spend up to 5 percent of state funds on innovative programs, which frequently employ Internet–based learning programs or independent study to deliver instruction to students.
• Significantly Expanding “Enrichment” Classes. Enrollment in enrichment courses—such as parenting, health and safety, and home economics classes—increased by 19 percent from 2001–02 through 2006–07. Enrollment in core classes (including ESL, basic skills, high school diploma, citizenship, and vocational classes) remained flat, rising only 3 percent over this period.

Revise Growth Formula—Reduce Funding Base. The mismatch between the statutory growth rate and the adult population rate—and the effect the higher growth rate has had on local programs—raises the question of whether the Legislature should continue giving adult education funding this special priority. In our view, the data suggest that many local programs have reached the point where they can no longer easily absorb additional funding by expanding core academic and vocational adult classes.

For these reasons, we recommend two changes to the adult education budget for 2008‑09. First, we recommend the Legislature adopt trailer bill language to eliminate the 2.5 percent statutory growth formula and instead base growth in adult funding on increases in the underlying adult population. Second, we recommend the Legislature fund adult education in the budget year at $30 million below the program’s 2007–08 funding level (this is roughly the same level as proposed in the Governor's budget for 2008‑09). This reduction would adjust the program’s funding level for the excess growth it received since 2003–04 because of the current statutory growth formula. It would also bring the adult education growth formula in line with the underlying growth in demand for services.