Annual report on school spending: a school board in Kansas is hawking extra property on eBay while districts in Florida are pocketing extra cash from the lottery. Find out the creative measures states across the country are taking to find extra funding in the money.

For the first time in close to two years the Dow has hit 10,000, unemployment rates are edging down and the manufacturing sector is posting gains. "The recent positive news on state budget performance is good not only for K-12 education budgets but particularly good news for other areas of state budgets that have carried a heavy share of the budget balancing measures in recent years," says Arturo Perez, program principal of the Fiscal Affairs Program for the National Conference of State Legislatures.

While the economy is beginning to show early signs of a turnaround, it will take a while for these benefits to trickle from state budgets to local budgets to actually increasing school districts' budgets. In meantime, educators have been working hard over the past fiscal cycle to find ways to bring bucks to their budgets. In fact, districts have been so hard hit with budget cuts, some have been forced to entirely deplete rainy day funds, raise property taxes and share superintendents among rural districts.

The seriousness of the problem may be no clearer than in Yonkers, N.Y., where the district faced hundreds of layoffs and the cancellation of all athletic and extracurricular programs. In early December, Mayor John Spencer was relieved to learn that the state would be putting together a collection of city and state funds to close a $21 million budget shortage. At a press conference, the mayor reported expectations to receive the money, although the district will be borrowing some of it from next year's funds.

So while signs of a rebounding economy is welcome news to education leaders, many have already taken action to find recovery methods of their own. Here are a number of examples of what educators across the country have been doing to bolster their economic landscape.

Using eBay

Ah, the Internet. Think how it's changed our lives over the past decade: now you can order a new wool blazer from Land's End and have your virtual model try it on before you click into commitment; you can log-on to Orbitz and choose to connect in Chicago instead of Atlanta on your next flight from New York to San Francisco, and you can get rid of that old school building on eBay. That's right, there are a few creative districts out there who are using the power of online auctions to sell unwanted items.

For example, after trying to give away its former middle school building to more than 40 charities, the rural La Crosse School District in western KANSAS turned to eBay. The school board was hoping to receive $5,000 for the 43,000-square-foot building that was no longer in use. To their amazement, 23,000 people clicked on the listing and one interested viewer won the bid, paying $49,500 for the building. The winning bidder is a businessman in Phoenix who plans to relocate his business to Kansas.

The rural, 225-student Elm Valley School District in SOUTH DAKOTA also found themselves in the situation of having an extra school building. After posting the building online, the district was paid $49,000 for the aging elementary school.

Over in MINNESOTA, the 1,333-student Pipestone Area district hung an electronic for sale sign on the circa-1911, 58,000-square foot Jasper School, as well as the 200,000-square-foot Pipestone School, starting at $1 each. The district's aim was to jump-start a local business to bring in jobs. In the end, 500 individuals inquired on the listings with several dozen serious bidders. The winning bidder for the Jasper School was a Midwestern businessman who plans to build apartments for senior citizens. The Pipestone School listing was taken off eBay after local officials didn't find a likeable business plan.

And districts aren't just selling buildings online--smaller items can also be found for sale. The private Central Christian Schools in Omaha, NEBRASKA sold more than 400 items on eBay in September, raising $20,000. Due to low enrollment, the district was able to sell off desks, musical instruments, football pads and microscopes.

Also in KENTUCKY, the 33,000-student Fayette County School District has raised $49,000 selling 30 school buses and other vehicles in the past year. The district is looking into selling another batch of buses soon.

Meanwhile in NORTH CAROLINA, the 425-student Wilkesboro Elementary School leveraged its affiliation with Canadian pop singer Avril Lavigne to raise money. The district gained popularity when Lavigne wore the school's green-and-yellow T-shirt in a music video. School administrators were inundated with calls to get replicas, contracted with a printing company and started selling the shirts for $30 each. With 4,000 T-shirts sold on eBay over several months, the district has netted more than $20,000.

Raising State Taxes/Fees

It's one of the two things that can't be avoided and as most states deal with revenue shortfalls, many are raising fees and taxes to help make up budget shortfalls. A 2003 report from the National Conference of State Legislatures shows that 34 states have raised fees, adding $2.8 billion in extra money for fiscal year 2004. MASSACHUSETTS leads the pack with $500 million in new fees.

Some of the revenues simply go back into states' general funds, leaving educators to reap benefits from the trickle-down effect. In NEW JERSEY, for example, the state raised fees for nursing homes, hotel lodging and casinos in order to generate additional general-fund revenue. Illinois, for instance, has imposed new riverboat-gambling taxes and fees and will allocate a portion of the proceeds to education.

Over in MARYLAND, the state raised cigarette taxes to cover a new funding package for its public schools. While in OHIO, lawmakers voted to increase the state sales tax by a penny and restore the $70 million they had planned to cut for primary-secondary education.

And in PENNSYLVANIA, the House of Representatives passed a package of bills to provide for education funding. For example, one bill increases the state personal income tax from 2.8% to 3.25%, effective January 1, 2004, and then reduces the rate to a permanent 3.1% on July 1. The increase is expected to raise $600 million in the first six months and $750 million annually.

On the corporate end of the equation, states are looking for revenues from big business. In TEXAS, for example, legislators are currently debating a revision to the state's corporate-tax structure that would raise taxes on some businesses while bringing property-tax relief to homeowners.

Meanwhile, in ARKANSAS, Gov. Mike Huckabee has proposed a small increase in sales taxes to meet the state Supreme Court's ruling to increase education spending in Arkansas. The governor also is championing a plan to reduce the number of school districts to make teacher pay increases and curriculum upgrades among other improvements more affordable.

And in VIRGINIA, Gov. Mark Warner has called on lawmakers in his state to review tax rules so that education funding, which he called "our most compelling need," could be bolstered.

Dipping into Trust Funds/Lottery

Have you ever dreamed of having a personal trust fund to fall back on if times got tough? Well, a number of states are dipping into their funds and finding relief.

According to the National Conference of State Legislatures, 38 states have revenue sources specifically earmarked for education. A handful of states, including MICHIGAN and UTAH provide all or nearly all their education funding through specific education reserve funds.

In ALABAMA, spending for both K-12 and higher education comes entirely from a $4 billion education trust fund established in the 1930s that relies on sales and income taxes. Expenditures cover teacher salaries and textbooks, among other education programs.

In 1986 the state of LOUISIANA won a settlement from the federal government about a battle over oil and gas revenues, To date, the Education Quality Trust Fund has distributed $842 million for a number of education programs.

Elsewhere, monies earned from a public-land trust in ARIZONA has resulted in that state receiving close to $1 billion in its school fund since the early 1990s.

Also in MONTANA, 5 million acres of state-managed land has generated income for education and other state programs since the 1880s. Last year alone, $45 million was earmarked for K-12 education.

During his State of the State address in 2003, Gov. Gary Locke of WASHINGTON announced the establishment of the Washington Education Trust Fund. If approved by the House, the fund would be initially supplied with at least $100 million. It's the governor's intention that, "as new revenue sources to meet education improvement goals are approved, those funds [would] go directly into the trust fund. Such resources will then only be available for improving education." The trust fund would be used for early learning, reducing class size and teacher salary raises, among other programs.

And by setting up an education endowment fund which serves as a depository for a share of lottery proceeds in 1997, OREGON has been able to finance a number of education programs.

Another winner in the lottery game has been FLORIDA. When the largest unclaimed prize in the history of the Florida Lottery was finally distributed, it was the state's school systems who came out the winners. In October, Gov. Jeb Bush, along with lottery secretary Rebecca Mattingly, announced the Florida Education Finance Program would be the beneficiary of the $50 million prize.

Also a lottery winner, K-12 educators in VERMONT will receive an estimated $3 million in proceeds from the state's Powerball monies.

Restructuring the Law

In CALIFORNIA, lawmakers are looking for ways to help close a budget shortfall of more than $30 billion over the next year-and-a-half. One leading consideration is easing the class-size mandate in K-3 classrooms.

Citing the receipt of some unexpected federal money, Gov. Bob Holden of MISSOURI recently released $83 million that had been held back from Missouri's public schools and colleges because of budget concerns. According to the Associated Press, the money amounts to a little more than one-third of the $222 million the governor withheld from education at the July start of the state fiscal year.

Holden claims the budget lacks enough revenue to fulfill its spending commitments. But he said the state Department of Social Services is receiving $83 million more than was budgeted from the federal government, which will help that agency pay for rising costs in the Medicaid health care program for the poor and disabled. That, in turn, will free up

existing money to go toward education, Holden says.

Saving Energy

For a few years cash-strapped districts in COLORADO have been saving both energy and money. Energy conservation is the key. Districts have been doing energy-performance contracting that allows building owners to launch renovations with no upfront payments.

The Mapleton School District in Adams County recently completed a $4.4 million energy-efficiency makeover and enjoyed a savings of $174,000 in utility bills the first year alone. The savings over 15 years is expected to repay a Wells Fargo loan that funded the improvements.

Since performance contracting in Colorado public buildings began in 1995, $34.5 million in improvements have been completed, with resulting annual energy savings of $3.9 million, according to the state's energy office.

Sharing Superintendents

While it may not be a possibility for all states, declining enrollment and stagnant budgets are leading some districts in Iowa to share superintendents. According to the School Administrators of IOWA, this school year, 40 districts are sharing superintendents. In 1986 Iowa lawmakers approved legislation providing school districts with financial incentives to share top administrators. In the 1991-92 school year, 119 districts shared superintendents. However, when the incentives expired in 1998, the numbers began to decline.

Making Corporate Deals

New York City could change its nickname to the "Big Snapple." At the beginning of this school year, officials in NEW YORK inked a $166 million deal with Snapple to allow the company exclusive rights to sell its beverages in the city's 1,200 public schools. Under the five-year contract, the Education Department will receive a minimum of $8 million a year in commissions and sponsorship for athletic programs. The city will receive at least $13 million a year based on sales in municipal buildings. While many districts have renounced these types of deals, because of concerns about students' health, like it or not, this deal works out to about $8 a year per New York City student.

Similarly, in INDIANA district administrators have formed a partnership with Pepsi Cola for exclusive selling rights in Warren Township schools. Under the five-year contract, Pepsi gives the district $110,000 annually which is split among the district's 18 schools. In addition to the lump sum, each school profits 40 cents from each bottle of Pepsi sold. If the vending machine is located in a hallway, that money is contractually required to be spent on the students. Besides that rule, each school principal has the right to decide on where their school's money goes.

The Public Education Dollar

Close to $401 billion of revenue was raised to fund public education for grades pre-K-12 in school year 2000-01. About three out of every five expenditure dollars were spent on teachers, textbooks and other instructional services and supplies. By far, the greatest part of education revenues came from non-federal sources (state, intermediate and local governments), which together provided about $372 billion, or 92.7 percent, of all revenues. The federal government contribution to education revenues made up the remaining $29 billion. As in the previous school year, local and intermediate sources made up 43 cents of every dollar in revenue; state revenues comprised 50 cents; and the remaining 7 cents came from federal sources. Federal revenues ranged from 3.9 percent in New Jersey to 15.8 percent in Alaska.

Revenues by Source
School year 2000-01
(Total revenues: $401 billion)

State ($199.1 million)                               50%
Local and intermediate ($172.6 million)              43%
Federal (29.0 million)                                7%

Expenditures by Function
School year 2000-01
(Expenditures: $348 billion)

Instruction ($214.2 million)                         62%
(teacher salaries, textbooks, etc.)
Support services ($119.3 million)                    34%
maintenance, nurses, administration, library etc.)
Non-instruction ($14.6 million)                       4%
(food service, bookstore, etc.)

Note: Table made from pie graph.

Characteristics of the 15 Largest Districts

In the 1999-2000 school year, there were 16,850 public school
  districts, 94,090 schools and 47.2 million students in
  public education in the United States. There were just
  under three million full-tie teachers. The 100 largest
  school districts make up less than 1 percent of all
  public school districts but serve 23 percent of the total
  number of public elementary and secondary school students.
  The 100 largest school districts represent 17 percent of
  schools and employ 21 percent of all teachers.

                Number of    Total          Total           Expenditures
                students     revenue        expenditures    per student

New York        1,075,710    $10,945,650    $10,189,002     $9,472
City
Public
Schools

Los Angeles       710,007      5,757,819      4,785,436      6,740
Unified

Puerto Rico       613,019      2,222,824      2,086,414      3,404
Dept. of Ed.

City of           431,750      3,604,873      3,114,612      7,214
Chicago
School
District

Dade              360,136      2,695,735      2,233,452      6,202
County
School
District

Broward           241,094      1,736,054      1,357,340      5,630
County
School
District

Clark             217,526      1,484,605      1,208,788      5,557
County
School
District

Houston           209,716      1,469,074      1,299,342      6,196
Independent
School
District

Philadelphia      205,199      1,667,597      1,310,905      6,388
City School
District

Hawaii Dept.      185,860      1,404,895      1,213,937      6,531
of Ed.

Hillsboro         159,517      1,232,877        926,880      5,811
(Fla.)
County
School
District

Detroit           167,124      1,504,525      1,419,508      8,494
City
School
District

Dallas            160,477      1,063,959        954,786      5,950
Independent
School
District

Fairfax           152,952      1,435,775      1,304,730      8,530
(Va.)
County
Public
Schools

Palm Beach        149,665      1,183,009        890,440      5,950
(Fla.)
County
School
District

Source: NCES, 2001-02 school year

Top & Bottom: Internal State Distribution

On average, for every student, about $4,539 was spent for instructional
services. New York spent the largest percentage on instruction, while
the District of Columbia spent the least.

New York

Instruction        68%
Support services   29
Non-instruction     3

District of Columbia

Instruction        50%
Support services   47
Non-instruction     3

Source: NCES, 2001-02 school year

Note: Table made from pie graph.

Facilities and Construction: Top & Bottom 10

Out of almost $412 billion in expenditures in the 2000-01 school year,
about $39 billion went for facilities acquisition and construction
(including new school construction, renovation and expansion). Not
surprisingly, California, the state with the highest student
population (6,140,814) spent the most construction projects
($5 billion). Rhode Island, the smallest state geographically,
spent the least ($8.5 million).

1.    California     $5350.0    41.Kansas            $85.2
                      billion                        million
2.    Texas          4303.6     42.West Virginia     77.3
3.    Florida        2633.8     43.Hawaii            76.2
4.    New York       2302.1     44.Massachusetts     49.4
5.    Illinois       2077.6     45.Montana           43.9
6.    Michigan       1742.7     46.Vermont           43.0
7.    Pennsylvania   1636.4     47.Kentucky          40.5
8.    Arizona        1528.3     48.Wyoming           39.6
9.    Georgia        1392.0     49.North Dakota      32.4
10.   North Carolina 1274.1     50.Rhode Island       8.5

Source: NCES, NPEFS, 2000-01

International Comparison of Expenditures per Student

                 Elementary and   Expenditures       GDP per capita in
                 secondary        as percentage      equivalent U.S.
                 expenditures     of GDP             dollars

Australia           $5,782              4.2               $25,559
Austria              7,806              4.1                25,703
Belgium              5,329              3.5                24,669
Canada               5,981              3.8                25,243
Denmark              7,226              4.1                27,679
France               5,944              4.3                23,155
Germany              5,734              3.4                24,627
Greece               2,571              2.5                15,799
Ireland              3,605              3.0                26,006
Italy                6,066              3.2                23,952
Japan                5,668              3.0                25,079
Korea                3,137              4.0                13,647
Mexico               1,240              3.6                 8,357
Norway               6,665              4.0                29,013
Poland               1,778              3.6                 8,991
Spain                4,331              3.7                19,044
Switzerland          8,194              4.3                28,778
United Kingdom       4,563              3.7                22,499
United States        7,397              3.8                33,280

Internationally, a positive pattern was seen between countries' wealth
and per-student expenditures. For example, Switzerland and the
United States, two of the wealthiest countries reporting data, also
ranked near the highest in amounts spent per student. In 1999,
expenditures per student averaged $4,850 at the elementary and
secondary level. However, expenditures per student varied widely
across these countries, ranging from $1,240 in Mexico to $8,194 in
Switzerland.

                          Source: NCES, The Condition of Education 2003

State by State Comparison

For the second year in a row, Washington, D.C., comes out on top,
  spending $12,046 per student, compared to the national average of
  $7,376. Only one state, Utah, had expenditures of less than $5,000
  for each pupil ($4,674). Three states--New Jersey ($11,248), New York
  ($10,716) and Connecticut ($10,127)--expended more than $10,000 per
  pupil. Expenditures for instruction totaled approximately $214
  billion--more than $154 billion went for salaries for teachers and
  instructional aides.

                Number of     Total Revenue  Total expenditures
State           students      (thousands)       (thousands)

Alabama           739,992      4,812,302         4,354,794
Alaska            133,356      1,370,271         1,229,036
Arizona           877,696      5,797,151         4,632,539
Arkansas          449,959      2,812,169         2,505,179
California       6,140,814     51,007,510        42,908,787
Colorado          724,508      5,349,899         4,758,173
Connecticut       562,179      6,460,491         5,693,207
Delaware          114,676      1,112,519         1,027,224
Washington        68,925       1,042,711          830,299
  D.C.
Florida          2,434,821     17,866,868        15,023,514
Georgia          1,444,937     12,191,113        10,011,343
Hawaii            184,360      1,682,330         1,215,968
Idaho             245,117      1,593,966         1,403,190
Illinois         2,048,792     18,217,079        15,658,682
Indiana           989,267      9,033,180         7,548,487
Iowa              495,080      3,954,176         3,430,885
Kansas            470,610      3,597,726         3,258,807
Kentucky          665,850      4,509,893         4,047,392
Louisiana         743,089      5,060,133         4,485,878
Maine             207,037      1,934,178         1,704,422
Maryland          852,920      7,846,891         7,041,586
Massachusetts     975,150      10,148,498        9,272,387
Michigan         1,720,626     16,358,532        14,243,597
Minnesota         854,340      7,873,549         6,531,198
Mississippi       497,871      2,903,534         2,576,457
Missouri          912,744      7,102,501         6,076,169
Montana           154,875      1,140,168         1,041,760
Nebraska          286,199      2,307,804         2,067,290
Nevada            340,706      2,393,494         1,978,480
New               208,461      1,714,147         1,518,792
  Hampshire
New Jersey       1,313,405     15,967,075        14,773,650
New Mexico        320,306      2,426,705         2,022,093
New York         2,882,188     34,266,171        30,884,292
North            1,293,638     9,262,181         8,209,954
  Carolina
North             109,201       767,798           668,814
  Dakota
Ohio             1,835,049     16,649,361        13,893,495
Oklahoma          623,110      4,034,825         3,750,542
Oregon            546,231      4,564,408         4,112,069
Pennsylvania     1,814,311     17,053,891        14,895,316
Rhode Island      157,341      1,545,675         1,465,703
South             677,411      5,459,399         4,492,161
  Carolina
South Dakota      128,603       885,229           796,133
Tennessee         909,161      5,711,950         5,170,379
Texas            4,059,619     30,469,570        26,546,557
Utah              481,485      2,745,656         2,250,339
Vermont           102,049      1,035,679          934,031
Virginia         1,144,915     9,313,330         8,335,805
Washington       1,004,770     8,058,875         6,782,127
West              286,367      2,375,788         2,157,568
  Virginia
Wisconsin         879,476      8,327,255         7,249,081
Wyoming           89,940        803,414           704,695

TOTAL/AVG.         47.2          $400.9            $348.1
                  million        billion           billion

                Salary        Expenditures
                (thousands)   per student

Alabama          1,920,297       5,885
Alaska            467,642        9,216
Arizona          1,906,875       5,278
Arkansas         1,149,953       5,568
California      19,033,888       6,987
Colorado         2,011,050       6,567
Connecticut      2,547,048       10,127
Delaware          429,192        8,958
Washington        284,503        12,046
  D.C.
Florida          5,932,501       6,170
Georgia          4,529,768       6,929
Hawaii            530,554        6,596
Idaho             615,109        5,725
Illinois         6,801,454       7,643
Indiana          3,122,306       7,630
Iowa             1,485,095       6,930
Kansas           1,495,455       6,925
Kentucky         1,864,736       6,079
Louisiana        1,977,404       6,037
Maine             737,464        8,232
Maryland         2,986,065       8,256
Massachusetts    4,493,638       9,509
Michigan         5,666,668       8,278
Minnesota        2,978,205       7,645
Mississippi      1,138,861       5,175
Missouri         2,750,210       6,657
Montana           455,772        6,726
Nebraska          933,525        7,223
Nevada            860,805        5,807
New Hampshire     676,554        7,286
New Jersey       6,161,143       11,248
New Mexico        824,988        6,313
New York        15,571,677       10,716
North            4,011,793       6,346
  Carolina
North Dakota      286,531        6,125
Ohio             5,718,711       7,571
Oklahoma         1,618,558       6,019
Oregon           1,560,477       7,528
Pennsylvania     6,749,599       8,210
Rhode Island      687,435        9,315
South            1,949,364       6,631
  Carolina
South Dakota      334,214        6,191
Tennessee        2,420,304       5,687
Texas           12,501,223       6,539
Utah              983,315        4,674
Vermont           399,144        9,153
Virginia         3,777,922       7,281
Washington       2,858,290       6,750
West Virginia     886,262        7,534
Wisconsin        3,058,774       8,243
Wyoming           293,957        7,835

TOTAL/AVG.        $154.4         $7,376
                  billion

Source: National Center for Education Statistics, inces.ed.gov,
  National Public Education Financial Survey 2000-01 school year