Iowa Education Leader #13 * May 16, 2003
A policy and advocacy update from the Iowa Department of Education * Ted Stilwill, Director

Education and the Economy in Iowa: The Tipping Point

As our state budget challenges have evolved over the past few years, my conversations with educators in school districts and community colleges have more frequently come to focus on economic growth in Iowa at both the regional and state levels. Most community colleges have, of course, been central in discussion about economic development, and both districts and community colleges are very much aware of the economic changes that have wracked Iowa in the last twenty years. Many Iowans have forgotten that we lost nearly 5% of our population in the 1980s and they may not know that we have seen slower population growth since 1990 than other states even in our region.

Iowa educators, on the other hand, know the demographics of decline very well. These smaller cohorts of young people are now on the doorstep of higher education and will be entering the workforce in smaller numbers, as large cohorts of baby boomers begin to leave. The shortage of qualified workers starves companies that are providing the critical commerce to support and grow our economy - an economy that in turn sets the foundation for a strong education system. Quite simply, unless Iowa can create an economic direction that can support an increased number of families through employment that pays well, our future will continue to look like our recent past.

There is certainly cause for optimism in the fact that state leaders recognize the need to set a new economic direction in Iowa, with their current discussion about creation of an Iowa Values Fund. While this need is now painfully obvious to Iowa educators who have watched the changes in families through the escalating needs of young children, it must also be understood that it requires considerable political courage to move aggressively in a new direction at the rate needed. For one thing, most Iowans have not come to grips with the need for change. Many believe that our fate is still tied to traditional farming and production agriculture that in 2000 accounted for only 9% of the total value of goods and services in our state. In that environment, it takes political courage to shift toward value added aspects of agriculture and biotechnology, to place a greater emphasis on more sophisticated manufacturing, and to prioritize information technology employers. Such a shift would mean that we would, to some extent at least, place a lower priority on the low-wage employers who still have an important contribution to the economy and who also could represent a large constituency of the business community.

My point today is not only to emphasize the importance of this dialogue, but also to focus on the urgency of immediate action.

Many of you are familiar with the book "Tipping Point" by Malcom Gladwell. Gladwell makes the point that a large set of conditions can be influenced by a single decision if the accumulation of factors is just right. I think that the relationship of education to Iowa's economy is at just such a tipping point today. If we do not begin a course of action to transform our economy, then the prolonged lack of resources to support the education enterprise will diminish our education system to a point that true recovery is not possible. Further, if a strong education is critical to building a strong economy, then inaction today risks erosion of the single greatest asset that we need to help recovery. Put another way, without a strong system to build human capital, not just maintain it, economic growth in the new economy is next to impossible.

It is true state policy makers have made a real effort to try to protect some parts of the education system in times of sharply declining resources. We need to be grateful for those efforts. Our shortfalls are not as great as in other states, and the reductions in education have needed to be less severe because of good

legislative stewardship and the priority given to education. It is with no lack of gratitude and no wish to suggest that the sky is falling that I persist in suggesting that the state's education asset is still at risk. The combination of budget data and impacts outlined below should make that point.

Community Colleges

This link http://www.state.ia.us/educate/ccwp/cc/reports.html to the chart on the recent history of community college funding in Iowa shows that the FY03 state appropriation to community colleges is 6.09% less than in FY01. Funding for FY04 is only scheduled to increase by 1.04%. In order to keep up with expenses that increased beyond the funding levels, community colleges across the state have had to increase tuition and fees by an average of 20.84% since FY01-FY03. Increased tuition reduces student access to postsecondary opportunities and means that more of those who can afford to attend will do so only by carrying a significantly larger debt. Increasingly community colleges will have to decrease their more expensive program offerings, which means technical programs most needed to support regional economic expansion. These are not the impact trends that support building the human capital for the new economy.

PreK-12

The recent funding picture for school districts is only slightly more positive than for community colleges as the link to this chart shows http://www.state.ia.us/educate/ootd/iel/index.html. While foundation aid for districts and AEAs increased by $43.5 million for FY04, that has been reduced for all districts by $2.9 million to fund education programs at state institutions, and by $10 million in reductions to AEAs (with another $10 million reduction in AEA reserves). Coupled with the elimination of Phase III with a loss of $10 million, the actual growth in K-12 funding is very small. For 68% of the districts with declining enrollment, there will be no growth at all. The shortfall between increased costs and growth in revenues is creating trends in K-12 districts that are just as problematic as we see in community colleges. A common response by districts is to increase class sizes, even at the primary grade level. After three years of reductions, class sizes in K-3 grades across the state increased last year, even with funding support for this purpose in place. As class sizes increase and funding for professional development evaporates because of the loss of Phase III and the inability of district budgets to support professional development, we lose our two most effective tools to improve student performance. It will be more challenging to assure basic literacy and even more difficult to increase the proportion of students who are prepared to succeed in postsecondary given these trends. The overall financial limitations of districts coupled with the understandable inability to expand the Teacher Quality initiative also means that our teacher salary positions will again become less competitive in the national market. This will become a particular problem for our smallest districts since the differences in teacher salaries between rural districts and urban districts are the third highest in the nation.

As educators, these facts are obvious to us because we see the future every day sitting in our classrooms. We have a unique vantage point and glimpse of our future, a recognition that the "tipping point" has arrived. Conditions are ripe for a transformation of our economy - and our educational capacity - if we take decisive action for bold changes in our economic development efforts. We must show our lawmakers that we will support these efforts toward new and emerging industries, making long-term investments and taking calculated risks. The Iowa Values Fund, set to be debated during the legislative Special Session May 29, is an important beginning point in setting a framework for far-reaching and future-focused economic development.

Obviously, I believe there is a critical relationship between education and economic development. This could not be more clearly articulated than the inclusion of funding for school infrastructure in the legislation for the Iowa Values Fund.

As a state we can commit now to investing in a new economic direction for our state. It will not be a quick recovery, but if we can agree on the direction, Iowans have the unique tenacity to rally support and make it work. The risks of acting aggressively are less than doing very little. Iowa history is testament to the statement by Olympic Gold Medallist Bob Richards, "Ingenuity, plus courage, plus work, equals miracles."

Iowa Education Leader will be distributed periodically from Iowa Department of Education Director Ted Stilwill. To send comments or receive a faxed copy, please contact editor Kathi Slaughter, 515/281-5651, kathi.slaughter@ed.state.ia.us.

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