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FOR IMMEDIATE RELEASE
August 13, 2001

News Release

Bleak Budget Outlook Puts Squeeze on States

Federal Government Must Not Shirk Its Responsibility to Children and Education

Washington, D.C. - On the eve of predicted dismal budget forecasts from the Congressional Budget Office and White House, NEA released a report illustrating the toll President Bush's tax cuts will exact on state education funding. The report shows that reductions in the federal estate tax will shrink state revenues by more than twice the new K-12 funding President Bush's budget provides. "The federal government is providing money with one hand and taking it away with the other," said NEA President Bob Chase. "The federal government must not shirk its responsibility to children and public education. They simply must address the shortfall they've imposed on states."

NEA findings are consistent with the concerns the nation's governors expressed at their annual meeting this week in Rhode Island. Even as the federal government places new demands on states with mandated testing and reporting requirements, state coffers will suffer disproportionate losses from new tax cuts enacted this year. States that peg their income tax on federal income tax levels stand to lose a significant source of funding at the expense of students in low-income districts. Compounding the effects of this revenue drain, the administration's phase-out of the federal estate tax which overwhelmingly benefits the wealthiest 1 percent of taxpayers will deprive states of close to $15 billion a year.

Although the President's budget increases education spending by 6.2 percent for 2001-2002, this increase is dwarfed by the states' total revenue losses generated by new federal tax cuts. The NEA report, which details revenue forecasts for all 50 states, shows that 41 states will suffer net losses. According to the report: "As school districts struggle to recruit and retain qualified teachers and to improve student achievement, the administration's policies sap state revenues and undermine public education."

"Political leaders started the year making bold pronouncements to improve public education and leave no child behind. Current economic conditions are threatening this righteous goal," said Chase. "Congress and the President must act now to shore up support for our schools, or our students will be paying the price for years to come. Simply imposing new demands without providing resources required for change, will fail to produce results."

The report can be accessed at http://www.nea.org/publiced/0107ed_finance.pdf

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The National Education Association is the nation’s largest professional employee organization, representing 2.7 million elementary and secondary teachers, higher education faculty, education support personnel, school administrators, retired educators, and students preparing to become teachers.