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Published in Print: January 23, 1991, as States' Fiscal Woes Put Education on the Defensive

States' Fiscal Woes Put Education on the Defensive

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As the legislatures begin their 1991 sessions, key lawmakers in many states are predicting that education will be on the defensive--and is unlikely to emerge unscathed--in the face of a spreading fiscal crisis.

Prospects for new education-reform programs or increased spending are dim or nonexistent, state education policymakers warn, and there are doubts about whether even basic school-aid programs can be protected.

The nation's first economic recession in seven years has created rising deficits in much of the nation and a bleak outlook for revenue to fund fiscal 1992 budgets. As a result, several state lawmakers with close ties to education said last week that they would be satisfied with maintaining current programs through the foreseeable budget cycles.

More than half of the states will be forced to order cuts or postpone spending in order to reconcile this year's budgets, recent surveys have found.

And without improvements in the economy, which has seen dwindling collections from the sales and income taxes that largely fund state governments, some states that have weathered fiscal 1991 could join the growing list of states facing substantial tax increases or program cuts for the new budget year that begins in July. (See Education Week, Jan. 9, 1991.)

"It's going to be a rougher year than education is used to," said Steve Gold, director of the Center for the Study of the States in Albany, N.Y. "The hard choices to get through fiscal 1992 are much more serious than the choices states are having to make to get through fiscal 1991."

For many states, the budget anguish will overshadow such education issues as school-finance equity and initiatives aimed at meeting national education goals, lawmakers said. Instead, mounting deficits and the determination of many state leaders to avoid tax increases could lead to deep cuts in programs, including basic state school aid, observers predicted.

Mr. Gold acknowledged that, "It's possible governors may postpone the day of reckoning and try to scrape by for fiscal 1992." But, he said, all of the present fiscal and political signs are "bad for education."

In New England, where the current recession began, lawmakers express only modest hopes for this year's session.

"I'd be inordinantly pleased if we can get out of here with what we have intact and try not to lose ground on the 'quality' issues, but it's going to be a tough haul," said Senator Kevin B. Sullivan of Connecticut, chairman of the legislature's Joint Education Committee.

Tax collections for Connecticut's current budget year are running about 8 percent behind appropriations, and Mr. Sullivan said lawmakers could face a $2.5-billion shortfall for the fiscal 1992 budget.

"There is not an area that's not going to see retrenchment," Mr. Sullivan said.

The education panel, which last year initiated proposals for performance-based assessments and a new mastery test for high-school students, plans this year to focus on maintaining current levels of state aid and granting flexibility to financially strapped school districts.

The revamped assessments for 4th-, 6th-, and 8th-graders, which state officials see as a cornerstone of school restructuring, will be temporarily shelved, Mr. Sullivan said.

While officials last year expected that the economy might worsen, he added, they did not think that the situation would deteriorate enough to force them to put the reforms on hold.

"One would have to have been completely without vision not to see what was coming, but there was a question of degree," he said. "We decided [last year] that even if we had to trim the sails a little bit this year, we didn't want to lose the opportunity to get on course."

Officials in other states also said maintaining the status quo would be an achievement.

"We aren't proposing much," said Cindy Parmenter, press secretary for Gov. Roy Romer of Colorado.

Although Colorado is slowly rebounding from its recession, Mr. Romer and legislators are expected to avoid new programs as they try to recoup a 1 percent revenue shortfall.

Colorado officials' desire for a quiet legislative session also reflects their reaction to a spending-limitation effort that almost won voter approval in November.

The failed Amendment 1 "certainly is a factor in all of this," Ms. Parmenter said. "Everyone is feeling its influence."

Indiana lawmakers also expect a legislative session driven by budget considerations.

While Indiana's fiscal 1991 shortfall is less than 2 percent, leaders of the state's education panels expect to spend most of their time protecting current school programs.

"Right now, we're doing very little here except drafting bills and waiting," said Representative Philip T. Warner, ranking Republican member of the House Education Committee.

The waiting, Mr. Warner said, is for the next update of state finances. Only with good news do Indiana legislators see hope for even the smallest education increases.

"It looks pretty dismal," added Senator John R. Sinks, chairman of the Senate Education Committee, remarking that most of this year's new initiatives will be hollow ones.

"Some of these bills will be going through without any money in them," he said.

Gov. Evan Bayh has proposed several education initiatives for the year, although their scope and cost has been tempered by a grim revenue forecast issued by the state budget agency last month. (See Education Week, Dec. 12, 1990.)

The fiscal crunch has also exacerbated the legislative deadlock over school-finance reform.

Lawsuits challenging the constitutionality of funding disparities between rich and poor school districts, which have been successful with increasing frequency in state courts in recent years, are planned or under way in more than a dozen states.

Governors and legislators in several of those states say they would like to head off the suits by acting themselves to equalize districts' spending power, arguing that they could achieve that goal more effectively and economically without court supervision.

But current revenue shortfalls--and voter resistance to tax increases--may have moved such costly equalization plans out of reach for many states.

"No one has talked tax increase; we're just not going to go through that," said Senator Sinks of Indiana. "If these revenues pick up, it could be different."

Representative Warner also sees little hope for true school-finance reform in Indiana. "We may pass it, but it will probably be without very much funding in it," he said.

Virginia legislators have known for several months that a group of 40 poor school districts was poised to sue the state over school funding unless reforms were imminent.

The Old Dominion's fiscal problems, however, have killed any chance that this year's legislative session could resolve the issue.

The state faces a fiscal 1991 shortfall of nearly 13 percent, and Gov. L. Douglas Wilder--who has vowed to solve the crisis without raising taxes--has called for $2 billion to be cut from the state's biennial budget.

"It looks like we'll be in court," said Delegate J.W. O'Brien Jr., chairman of the Virginia House Education Committee, adding that the only way state officials will address finance equity this year will be in considering how to allocate cuts imposed on school districts.

The House education panel plans this year to consider granting waivers so that districts, which have already lost $101 million in state aid, will be freed temporarily from state staffing and class-size mandates.

Delegate O'Brien said the waivers for districts would be granted "until the financial situation changes."

Even the Coalition for Equity, the group of poor districts, has decided to focus on lobbying over the cuts instead of pushing a new finance plan.

"I don't think anyone expects any action from the legislature," said Mark Pace, superintendent of the Allegheny Highlands district and chairman of the group. He said that the group will decide this spring whether to file suit.

Officials of the districts note, however, that they may not be able to afford to wait until state officials deem the economy healthy.

"Of course the condition of the economy makes it more difficult to deal with, but the question of equity is one that transcends what the economy might be like this year or next year, and we believe the state has a responsibility to correct it," Mr. Pace said. "Looking at the General Assembly's time frame, we're looking at mid-1992 before you see anything starting to happen."

Meanwhile, Mr. Pace's district, like many others in Virginia and across the country, will examine how it operates given severe state cuts. In Allegheny Highlands, Mr. Pace said, officials will have to find $450,000 in new funding next year just to continue present programs.

Pay increases are unlikely next year, he said, and personnel and pro8gram cuts would be considered if state cuts go any further.

Belt tightening is also the reality for some states that had expected to see revenue growth this year.

Georgia officials, who passed a 1-cent sales-tax increase last year, say that total collections nevertheless are off about 4 percent this year.

Bill Mangum, a former House education-committee chairman who now serves as executive assistant to the new Governor, Zell Miller, said that Georgia schools will probably not see any cuts in basic state aid. But, Mr. Mangum added, the sales-tax hike that was expected to produce new revenue has ended up barely keeping state government afloat.

"If we hadn't done that we'd really be in a fix," he said, adding that the budget crunch is causing state officials to curtail new efforts. Mr. Mangum said cutbacks will probably kill a new geography curriculm that required the state to put up $50,000 in matching funds, for example.

Still, Georgia's bout with the recession so far has been mild by New England standards. And, Mr. Mangum observed, the year may end up having its positive side for education.

"These tight years are not all bad," he said. "I think we need to tighten our belt occasionally and look at the things we are spending money on."

Senator Sullivan of Connecticut, on the other hand, expressed concern that in states where cuts are being made, lawmakers will focus only on dollar amounts and fail to scrutinize the value of individual programs.

"When the budget becomes the driving issue, it tends to drive out considerations of school reforms and looking at problems from the performance and managerial side," Mr. Sullivan said. "We have to realize this too will pass, and not strip back to the bare bones overnight."

Vol. 10, Issue 18, Page 22, 24

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