State deficits mean cuts in education funding

1/14/03 – With states facing the worst fiscal situation since World II, cuts in state education funding are forcing local school districts to weather a tough budget year–and, in some cases, take drastic measures to keep school doors open.

Hardest hit by the budget crunch is California, where a projected budget shortfall of nearly $35 billion in the next fiscal year prompted Gov. Gray Davis to propose cutting K-12 funding more than $1.5 billion–with some cuts taking effect in the middle of the current school year.

"It's not pretty," says Rick Pratt, assistant executive director of the California School Boards Association (CSBA). "It's late in the year to be pulling the plug on district expenditures."

As School Board News went to press, Davis was preparing to announce his formal budget plan to the state legislature. But the state already has cut spending on programs to help underperforming schools and subsidize teacher training. In expectation that state aid funds will be cut, local school officials have been considering a variety of cost-cutting measures, including layoffs, pay cuts, larger class sizes, and the elimination of non-essential services and programs.

The Irvine Unified School District, for example, is looking at approximately $4.3 million in lost state aid out of a $173.4 million budget. But the school system made sizable cuts last year, leaving school officials with few remaining options. Indeed, officials are now considering such ideas as boosting class sizes, which already averages as high as 40 in the high schools.

Not every state is in such dire fiscal straits. But the Los Angeles Times reports that at least a dozen states "face deficits equal to 15 percent or more of their annual budgets."

The American Legislative Exchange Council last week estimated the collective deficit for all 50 states next fiscal year will approach $90 billion.

"The fiscal crisis is affecting states across the country," Raymond C. Scheppach, executive director of the National Governors Association, said last fall. An explosion in health care costs, coupled with a loss of revenues attributable to the economy, has "battered almost every state budget to the point where there just are no easy choices left."

Pay cuts proposed

Almost all states are feeling the fiscal pinch. But schools in some states have been hit particularly hard.

In Oregon, where state aid accounts for 57 percent of K-12 funding, school officials have struggled for months to cope with the state's steadily worsening budget situation. The state's 2001-03 biennial education budget is expected to be cut by $375 million.

Every school system in the state has been affected. But much public attention has focused on Portland, the state's largest school system. It already has tapped into its financial reserves to cope with declining revenues. This year, after another $38 million in budget cuts, the 53,000-student district has a budget comparable to a decade ago. As much as $13.5 million in cuts might be necessary by February.

The fiscal situation is so severe that officials are looking at the unthinkable. Spring sports have been cancelled, and planning is under way to end the school year 15 days early. Already, administrators have been told they will receive a three-week pay cut, and negotiations are under way with the teachers union for similar cuts.

The real cost, of course, will be borne by students, says district spokesperson Lew Frederick. "They won't be in school as long as they need to be." Currently, the school year is 177 days, "not exactly the longest school year in the nation."

As budget forecasts change, and many state legislatures meet this month to tackle the fiscal problem, it's hard to predict exactly what impact all of this will have on local schools. But the numbers that are available make clear that states are under intense pressure to trim education funding. Consider:

• In Kentucky, the state budget shortfall is estimated at $144 million this fiscal year and $365 million next year. Budget analysts suggest K-12 funding could be cut by $266 million between now and July 2004.

• In Indiana, state leaders cut $200 million from the K-12 budget last year and delayed $274 million in funds. This month, state lawmakers are looking at a projected revenue shortfall of $760 million.

• In Washington, Gov. Gary Locke's proposed budget boosts overall education spending by $310 million–mostly due to mandatory enrollment and inflationary costs. But his plan also cuts $450 million in voter-approved class-size reduction and teacher cost-of-living funds, along with $143 million in existing education programs.

• In New Jersey, state officials faced a $6 billion budget gap this fiscal year–and predict a $4 billion to $5 billion shortfall next year. Education funding makes up 40 percent of the budget.

No easy solutions

The impact of state budget woes is percolating down to the local level in many ways. To help weather a $22 million budget cut, the Oklahoma City school system eliminated several bus routes this year, forcing hundreds of students to find their own way to school.

In Tucson, Ariz., the media reports that school principals have asked parents to bring in toilet paper and sponges. The Dayton, Ky., school system trimmed its teaching staff and imposed a spending freeze on all non-essential purchases.

This month, school officials are watching with keen interest as many state legislatures reconvene to tackle the budget situation. Last year, Tennessee raised its sales tax, and Massachusetts added a levy on capital gains. Several states raised cigarette taxes.

But as many states enter a second year of deficits, balancing the budget is getting more challenging. "Rainy day" funds are spent, and expenses deferred last year are coming due.

Some governors, such as Davis in California, have promised to try to shield education from future budget cuts. But others have pledged to hold the line on further tax hikes, raising the likelihood that spending cuts are on the horizon.

Concerns that education will have to shoulder a sizable share of future cuts has rallied state school boards associations and other education groups to speak forcefully about the need to protect education funding.

In California, a coalition of groups, including CSBA, is reviewing the governor's preliminary budget proposals in hopes of identifying budget cuts it believes the public schools can withstand. Educators say they want to suggest possible cuts–and not simply sit back and let lawmakers make the decisions.

So far, Pratt says, the coalition has identified about $800 million in cuts that it will tell lawmakers are feasible without irreparably damaging the education system.

Beyond that, however, "it gets a little tricky," he says. "We're going to be cutting into those things that support what goes into the classroom."

In Washington, the budget situation has "really hardened our resolve" to speak out about the need for new revenue sources for education, says Dan Steele, assistant executive director for the Washington State School Directors' Association.

The Wisconsin Association of School Boards has been working on a study on school funding it hopes to release later this winter.

"We're concerned that, in the worst case, we'll get some knee-jerk decision about school funding that's not well thought out," says WASB spokesperson Annette Talis.

Meanwhile, state teachers unions are taking a more confrontational approach. On Jan. 14, the Washington Education Association is hoping to empty local schools and send thousands of teachers to demonstrate at the state Capitol. Kentucky teachers are planning a similar rally on Feb. 12.

NCLB progress imperiled

Although the immediate impact of today's gloomy budget choices are on everyone's minds, school officials also are beginning to voice concerns about how program cutbacks will stymie efforts to meet the academic performance mandates of the No Child Left Behind (NCLB) Act.

These concerns are particularly acute in California, where state and local officials have spent the past five years planning and implementing academic improvements.

"It's horrible," Pratt says. "It's going to put us even more at risk of not meeting the requirements for annual yearly progress. It's going to make it more difficult to recruit and retain high-quality teachers. If we're not going to be able to stay competitive in salaries, then it's going to have an impact on our ability to meet the requirements of NCLB."

Kevin McCann, community and agency liaison for the Oregon School Boards Association, says his state is in better shape than most to implement NCLB.

Still, he says, "we can ill afford right now to be spending additional funds on those kinds of things, because . . . resources have been squeezed in our schools. When you add more of the kinds of programs that NCLB requires–let alone the attention and energy it takes–we just can't afford to do that right now. It's a huge burden."

The New Hampshire School Boards Association (NHSBA) has prepared a model resolution calling for local boards to urge voters to oppose "any and all unfunded and underfunded federal education mandates," including those in NCLB and the Individuals with Disabilities Education Act.

At least three New Hampshire school boards–in Hanover, Interlakes, and Somersworth–have already passed resolutions, says Dean Michener, director of government relations at NHSBA, and many other districts in the state are expected to follow suit.

According to an analysis by the New Hampshire School Administrators Association, NCLB will cost districts in the state $575 per student, while districts can expect to receive only $77 per pupil in new federal money.

NCLB "is asking states to do more than they have ever done in education at a time when most states face severe economic problems," states From the Capital to the Classroom, a new report by the Center on Education Policy, a Washington, D.C.-based think tank.

"With many states looking at budget freezes," the report says, "state departments of education may lack the funding, staff, and expertise needed to fulfill all these demands."