Published Online: February 3, 2011

Texas Schools Face Deep Cuts Amid Budget Crunch

Rep. Jim Pitts, the chairman of the Texas House appropriations committee, answers questions about the proposed budget. Texas faces a projected shortfall of $15 billion to $27 billion.
—Eric Gay/AP

Texas is famous for its oversized economic booms and busts, but its schools are bracing for a potentially dramatic bust of their own as state lawmakers consider budget cuts for the coming year that some fear will result in thousands of job losses and the elimination of programs serving students of all ages.

State officials, facing a two-year budget shortfall of anywhere between $15 billion and $27 billion, have proposed deep reductions in school spending, including providing less than is required by the state’s school-funding formula.

The budget predicament would seem to leave the state with a number of options for closing the projected shortfall, most of them unpleasant. Lawmakers could make deep spending cuts. They could dig into a $9.4 billion rainy-day reserve fund or increase state fees. Or they could raise taxes, though Republican Gov. Rick Perry, who was re-elected last fall, and GOP leaders in the state legislature have pledged not to do so.

“It’s kind of hard to quantify where it would hurt most, because there are cuts everywhere,” said Jenny LaCoste-Caputo, a spokeswoman for the Texas Association of School Administrators. Over the past few years, the state’s schools “have been cutting,” she said. “They’ve done it, and tried not to affect what goes on in the classroom. There’s no fat left.”

A Starting Point

In a pair of proposals released last month that will serve as a working template for budget planning and negotiations, lawmakers in the Texas House and Senate called for deep cuts in K-12 programs over the next two years. The state operates under a biennial budget, and its state constitution requires the budget to be balanced.

The House plan calls for reducing total state spending from $187.5 billion to $156.4 billion during that period, about a 17 percent drop. The state’s foundation spending on school districts would fall from about $37 billion to roughly $32.8 billion, but spending on education would also be about $9.8 billion less over two years than what is called for through the state’s school-funding formula. While a Senate plan offers schools a bit more money, education advocates say either version would bring significant pain.

Lynn Moak, a partner with the consulting firm Moak, Casey, and Associates, who has analyzed state education for years, said the scale of the proposed cuts, as a legislative starting point, is probably unprecedented. Texas school systems would be forced to cut between 80,000 and 100,000 jobs if the spending cuts took effect, estimates Mr. Moak, whose Austin, Texas-based company consults school districts on financial issues.

Texas lawmakers, who meet every other year in regular sessions, have emphasized that the initial budget proposals are only the beginning of a process that will consume lawmakers' attention for months.

Republicans, who control both chambers of the legislature, pledged to look at a number of options to close the budget gap over the course of the session, scheduled to run through the end of May. In a speech on the floor of the state Senate last month, Republican Steve Ogden, who chairs the Senate Committee on Finance, said lawmakers need to address “serious structural problems” in the state’s method of funding schools, which he said continually leaves the state short of revenue.

“Our job in this Texas Senate is to manage the problem, and not let the problem manage us,” Sen. Ogden said. “It will not be easy, it will not be painless, but we can get the job done. ... In order to balance this budget, we’re going to have to fix public school finance.”

In a statement, Texas Speaker of the House Joe Straus, a Republican, said he was “confident we will protect direct services for students in the classroom, as we work to fulfill our constitutional duty to balance the budget this biennium.”

Job Losses Coming?

As currently written, the House budget would eliminate or scale back a wide range of programs, in areas such as technology, prekindergarten, science laboratories, efforts to promote high school completion, financial aid for college, and merit pay for teachers.

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But the most severe cuts to schools are likely to come in the form of layoffs of teachers, administrators, and other personnel, said Dominic Giarratani, an assistant director for governmental relations at the Texas Association of School Boards. About 80 percent of districts’ budgets are consumed by personnel costs, he noted, and if basic state funding to districts is $9.8 billion less than schools need over two years, school systems will have no choice but to cut jobs.

“Almost uniformly, [school officials] are saying it’s going to have a devastating impact,” Mr. Giarratani said. “Schools can’t set the price of gas, and they can’t set utility costs. The thing they can control is personnel.”

Even so, Mr. Giarratani predicted that as school districts begin to draw up their own budgets, which call for layoffs and other deep cuts, lawmakers would feel compelled to add money back into the budget.

The budget cuts “touch a lot of people,” he said. “When people see how they’re going to affect them, I think legislators are going to hear their concerns.”

Texas faces a budget gap of at least $15 billion over the next two years, a shortfall that is partly the result of losses in tax revenues stemming from the force of the recent economic downturn. But some budget analysts project a shortfall of about $27 billion once factors such as growth in student enrollment and other projected costs are taken into account.

Mr. Perry, who has governed the state since 2000, has long touted his record of fiscal conservatism. He has argued that his work keeping taxes low and regulations in check has allowed Texas, the nation’s second most populous state, to emerge from the country’s deep economic downturn in stronger shape and with a lower unemployment rate than many other states. During the election campaign last fall, Mr. Perry’s Democratic opponent, Bill White, pointed to the state’s anticipated budget shortfall to question the governor’s record of fiscal restraint. But voters sided with Gov. Perry in that race, electing him to a third term in office.

Facing the Cliff

Gov. Perry has also been a critic of federal economic-stimulus spending, although his state has accepted billions of dollars in that emergency aid, including money for schools. Like many states, Texas is now bracing for the loss of stimulus funds, an event known among school budget analysts as the “funding cliff.” During the next budget cycle, Texas must make do without $3.3 billion in stimulus aid that has supported its school district funding formula, according to the House spending proposal.

While school advocates hope lawmakers will fight to protect education funding, the Texas Conservative Coalition Research Institute, a policy group that advocates for limited government, said state officials should look to cut spending that doesn’t flow to the classroom.

Some parts of district spending, such as administrative costs, are “unsustainable fiscally [and] unacceptable as a matter of policy,” said Brent Connett, the task force director for the group. Mr. Connett said, “Our public school system is plagued by inefficiency.”

Variations on Texas’ budget woes are playing out across the country. State tax collections, adjusted for inflation, are 12 percent below pre-recession levels nationally, and 2012 could be states’ worst budget year on record, according to the Center on Budget and Policy Priorities, a Washington-based research organization. Forty-four states are projecting budget shortfalls in 2012, the center says.

At several points in its recent history, Texas’ economy has swung between periods of breakneck growth and brutal downturns. The state suffered a severe blow in the mid-1980s when the price of oil fell, and setbacks to the computer and information technology industries during the “tech bubble,” at the turn of the 21st century, brought widespread job losses.

But many longtime school advocates say budget conditions today pose a far greater threat to education than those economic downturns did. The budget proposals appear to offer districts no choice but to cut jobs and programs, said Eva DeLuna Castro, budget analyst for the Center for Public Policy Priorities, a nonpartisan, Austin-based organization that advocates for low- and moderate-income Texans.

Past crises, she said, were “like a stubbed toe compared to what’s happening now.”

Vol. 30, Issue 20

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