They currently are here in central New York; and they were in Colorado, at least through 1998, when I graduated....I assume they still are, as I got to know the professors who teach future teachers, and they were adamantly AGAINST teaching phonics.
I started back to school in 2002 (and graduate in 16 days). All of my texts that mentioned the subject, advocate a combination of phonics and real literature. I think you'll find there has been something of a shift in the last handful of years. I'd expect liberal bastions to be more stubborn about it, but I'm in Kentucky. :)