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School Reform on Hold as Cities Face Fiscal Crunch

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The country's big-city school districts are having to make hard choices this summer as the recession causes many of their traditional sources of funding to run dry.

Proposals to lay off personnel and severely cut programs have dominated the agendas of many school boards in recent weeks, causing education reform to take a back seat to the necessity of financial retrenchment.

"Most persons who have been here at the district and have seen the cuts over the years say these are the most devastating cuts that have ever affected our school district," said Diana Munatones, the spokesman for the Los Angeles Unified School District.

The district, which is the nation's second largest, is facing a $241-million deficit in its $4-billion budget for the new fiscal year, Ms. Munatones said.

"We have cut and trimmed and repositioned and restructured every way we can," she said.

Similar situations were described by education officials in New York City, Chicago, Boston, and other cities as many faced their second tight budget year.

Michael Casserly, associate director of the Council of the Great City Schools, said, "I don't know of any city schools that you could describe as financially robust."

"On the other side," he added, "it is still too early to tell for some city school districts how bad off the picture is going to be."

Cities' Poor Fiscal Health

Mr. Casserly's group, which represents 47 of the country's urban school districts, is conducting a survey of the financial health of urban districts that it expects to have completed this fall.

Until then, Mr. Casserly said, the single best indicator of the financial condition of urban schools may be a recently released annual survey by the National League of Cities. The league's poll found that more than one in four city governments is facing a budget gap in excess of 5 per4cent this year.

More than 70 percent of the 525 cities surveyed by the league reported being less able to meet their financial needs than they were a year ago. Small cities and towns were found to be particularly vulnerable to severe budget imbalances of more than 5 percent.

For school systems that depend heavily on funds from municipal governments, such financial woes have been especially detrimental.

The New York City system, for example, must wrest most of its funding from the cash-strapped city government. And in Bridgeport, Conn., the first major city to file for bankruptcy in at least a dozen years, the public schools get about one-quarter of their $120-million annual budget from the city. (See Education Week, June 19, 1991.)

But even in districts that do not receive much funding from their city governments, Mr. Casserly pointed out, the financial condition of many school systems mirrors that of municipalities because they rely on many of the same funding sources.

Most of the chief sources of revenue for urban districts are "in bad shape," Mr. Casserly said.

Depressed real-estate markets are choking off property-tax revenues, while the recession has caused sales-tax revenues to decline as well.

Moreover, three-fifths of the state governments faced deficits this year. Many have responded with severe school-aid reductions that, in some cases, are still being decided or announced. (See related story, page 28.)

"In the midst of this, the federal government continues to be an ever more minor-league player in contri8butions to school budgets," Mr. Casserly said, noting that federal aid now accounts for about 10 percent of urban school budgets, compared with 18 percent in 1980.

About the only bright spot for most urban districts is in the area of bond funding.

"Schools have done reasonably well passing their bonds over the last couple years," Mr. Casserly said, adding that districts "are doing better in terms of selling their needs to the public."

But the Bridgeport school district, which itself is solvent, is experiencing the fallout from its city's bankruptcy as it attempts to get bonds to finance capital projects. James A. Connelly, the superintendent of the Connecticut district, said the city's financial straits have seriously undermined the district's credit rating.

Tough Times in New York

In New York City, a combination of city and state budget reductions has left the $7-billion budget of the nation's largest school district facing a cut of nearly $465 million, $200 million of which would have a direct impact on classroom instruction, district officials said.

Schools Chancellor Joseph A. Fernandez and members of the board of education have been working with Mayor David N. Dinkins and the city council to see if additional money can be found to restore aid to schools.

The chancellor and the school board also have retained a law firm to pursue legal remedies for the district available under the state's Stavisky-Goodman law, which requires New York City to maintain a level of support for education comparable to the average level of educational support over the previous three years.

A spokesman for the school system said school funding has accounted for an average of 25 percent of New York City's budget over the last three years, but that the new city budget would leave schools financed well below that level.

The United Federation of Teachers, asserting that school funding is $315 million below the Stavisky-Goodman minimum, served summonses to city officials this month in another effort to pressure the local government on the issue.

If the city's cuts in school aid are not restored, Mr. Fernandez said in a written statement, the schools will be forced to eliminate more than 7,000 positions, about half of them classroom teachers, and slash funding for books, supplies, and equipment by 63 percent, among other cuts.

The new president of the board of education, H. Carl McCall, this month asserted that the proposed cuts would "dramatically increase class size and strip our schools of the services our children need to stay in school and graduate."

In an effort to save $50 million, the New York City schools are using a retirement-incentive plan to encourage higher-paid veteran staff members to leave. More than 3,500 teachers are reported to have taken advantage of the incentive program so far.

Fiscal Crunch Elsewhere

Similar austerity budgets and retirement incentives have been implemented by other cash-strapped city school systems.

Among the developments this summer:

  • The board of the Los Angeles Unified School District has adopted a tentative budget that eliminates more than 1,500 positions and calls for the district's remaining employees, whose contracts remain to be negotiated, to take pay cuts, unpaid furloughs of two to five days, and a freeze on raises.

Ms. Munatones, the district spokesman, blamed the tight budget on meager state funding. "We have the leanest administration for any district our size in the nation," she asserted.

The Chicago school system faces a $315.8-million deficit for the new fiscal year, an amount far exceeding a $1.8-million increase in aid to the district approved by the state legislature. (See related story, page 12.)

  • The Chicago Board of Education announced this month that it would eliminate 345 positions, including 61 that were already vacant. Other measures being considered by the district include salary rollbacks, office consolidations, and travel restrictions.
  • Franklin L. Smith, the new superintendent of the District of Columbia schools, announced this month that he would cut 79 central-administration positions that cost the school system more than $4.2 million annually.

Thirteen administrators accepted early-retirement buyouts, 14 will be "bumped down" to other positions, and the rest will receive termination notices, school-district officials said.

  • The Dade County, Fla., school district has tried to cope with a sharp drop in revenue from the state sales tax and from property taxes by cutting almost $100 million in programs from its $2.4-billion budget.

Dade has dropped plans to give its employees a 3 percent salary increase, and many administrators have been offered early retirement, reassigned to jobs in school, or promoted without raises, officials there said.

The school board also has proposed raising residential property taxes by 3.4 percent to cover operating costs and the costs of building schools to accommodate a boom in student enrollment driven by immigration.

  • Lois Harrison-Jones, the newly appointed superintendent of the Boston schools, this month solicited suggestions from administrators for dealing with an $18-million deficit.
  • The district's mentor-teacher program, a cornerstone of its 1989 teachers' contract, was one of the programs in danger of being discontinued for lack of funds.
  • The Cleveland school board has approved the layoff of 226 teachers to address a deficit estimated at $34 million.

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