A COLA is more than a tasty soft drink. In policymaking and economics, COLA stands for “cost of living adjustment.” Prices of goods (like groceries, rent, healthcare, transportation, electricity, etc.) and services (like haircuts, teaching, legal services, car maintenance, etc.) change and often increase steadily over time. So, a cost of living adjustment ensures that decision makers consider those cost changes when figuring out how much money to budget each year. By including changes in goods and services each year, lawmakers are able to help organizations and groups keep the quality of their services and pay for their needs.

Two days ago, the joint legislative education committee met to finish making recommendations about funding for 2016 and 2017. In years past, this committee offered a cost of living adjustment for things related to adequacy and the state’s foundation funding for schools. But this year, they looked at these areas line by line to make decisions of where to add more (or less) funding. They use Moody and Global Insight economic reports to help them calculate what the cost of living adjustment should be.

Based on those calculations, they recommended a cost of living adjustment (or an increase of 2%) to English Language Learners funding, Alternative Learning Environment funding, and substitute teachers. They didn’t give a COLA but suggested an increase in the number of librarians funded, and raised teacher minimum salaries by less than 1%. Our lawmakers suggested an increase to technology funding, but didn’t recommend changes for instructional facilitators, school secretaries, and special education. If you want to see a more specific draft of the full list of recommendations, click here  and see pages 90 and 91.

So, what happens when services aren’t given cost of living adjustments (or in other words, are flat funded)? Flat funding – or keeping the same amount from year to year – is as damaging as cutting funding. It hurts public services because it doesn’t provide the necessary funding for groups to meet their needs at the current level of financial demands. Without proper adjustments in education funding, schools will have to make tougher decisions like cutting support staff or waiting to update materials. These tough decisions could reduce quality and effectiveness.

Pre-K education in Arkansas is a prime example of this. Pre-k is not included in the adequacy process for the K-12 education budget, but it is an example of a program experiencing challenges because of flat funding. The costs of materials, equipment, and food have all increased, but pre-k education hasn’t received a funding increase in seven years. So if we continue to flat fund pre-k, they wouldn’t be able to give 3 and 4 year olds the quality of education they are offering now.

In other words: when thinking about cost of living adjustments, remember that it isn’t extra funding. Instead, think of it as necessary funding to meet needs and keep the quality of services intact each year.