The quoted figures below are from a Texas Public Policy Foundation (TPPF) report entitled Follow the Money. Using data from the Census Bureau and other sources for 2001, this report makes state by state comparisons in education spending and sources of revenue.

>>  View the full Texas Public Policy Foundation Report

>>  View selected Hawaii Statistics from the Texas Public Policy Foundation tables

This report is significant for Hawaii because it documents the neglect of the education system that exists in this state and partially explains why. In many categories Hawaii places first or last, and in either case it is the opposite of what would be best for the state’s education system.

For example:

“Public schools are funded through a mix of local, state and federal funds in every state, with some small funding from other sources (such as corporations and foundations). The proportions of this mix vary widely from state to state. In 2001, the highest state share was shouldered by Hawaii (89.8%) and lowest by Nevada (28.6%).”

“The lowest percent of local funding for education is in Hawaii (1.8%).”

The lack of local funding also means a lack of local control and accountability. Because Hawaii has the only state run education system in the nation the vast majority of funding comes from the state’s general revenue fund. This had another effect as well.

“Wisconsin spent the most per pupil ($10,249.00 cost-adjusted dollars) and Hawaii spent the least ($5,333.00 cost-adjusted dollars).”

It is no wonder that Hawaii has such a poor education system, it spent the least per child of any state in 2001. This isn’t because the people of Hawaii didn’t pay enough in taxes. The Census Bureau for 2001 ranks Hawaii third highest in per capita spending at $5535.50 and fifth in per capita tax revenue $5,371.76.

At the same time, income growth in Hawaii is dead last. For the period from 1991 to 2001 the report states:

“Annual taxes (including fees) increased throughout the nation, with only one exception – Alaska. Growth was as low as 1.08% in Hawaii and as high as 9.07% in New Hampshire. Annual income also grew in all states; income grew slowest in Hawaii (1.12%) and fastest in Nevada (6.74%).”

The report reveals why this is important:

“The relationship between growth in state taxes and personal income is widely used as a measure of economic health. The rule of thumb is this: taxes should rise no faster than growth of personal income.”

Even though Hawaii has one of highest per capita tax burdens, tax growth virtually kept pace with income growth. The percentage of spending on education as a proportion of the state budget rose at the same time rising from 18.15% in 1996 to 22.25% in 2001. The state is spending itself into a hole. This is bad economically.

“Another measure of economic health is the relationship between state revenues and spending. Today, few states can meet this measure as spending surpasses annual revenues in many states [shown in the state fact sheets, section entitled State Spending and Revenue].”

Spending exceeded General Revenues by 6.25% or by $215,000,000 in 2002. Thus the economic health of Hawaii is threatened by these practices. This is part of the reason why the state has the lowest income growth.

The drag on the economy by the taxation required to fund this level of debt load dampens economic growth. Hawaii clearly needs education reform, in revenue sourcing as well as administration. Education is the lion’s share of the state budget so the problem is structural, not monetary. Decades of inattention has led to a system that is expensive yet delivers the least amount of money to the students themselves. Correcting this error should be the main objective of any reform.