Published Online: April 5, 2011
Published in Print: April 6, 2011, as States Hurt as Stimulus Loses Steam

Stimulus' End Puts Squeeze on Education Budgets

Principal Marie Stratton checks up on students in the cafeteria of Osceola Elementary School in Volusia County, Fla., after they were relocated from a portable classroom because of a tornado warning. Because of budget constraints, Stratton oversees two schools.
—Hilda M. Perez for Education Week

'Funding cliff' adds to pressure on strapped education budgets

States are finally arriving at the “funding cliff”—the point where about $100 billion in federal economic-stimulus aid for education runs out. The loss seems certain to compound severe budget woes and could mean thousands of school layoffs and the elimination of popular programs and services in districts across the country.

The bulk of that one-time aid, part of $814 billion provided under the American Recovery and Reinvestment Act passed in 2009, went to save the jobs of teachers and other school employees, as state and local tax bases and other revenue sources collapsed during the prolonged economic downturn of the past few years.

But states are required to have spent the majority of their stimulus aid by September, and most will burn through it even sooner, by the end of the current academic year, budget experts say.

Several states, including Florida and Ohio, are preparing budgets for next school year that would leave districts with significantly less money, a reduction at least partly due to the evaporation of stimulus aid.

This story is the latest installment in a joint initiative by The Associated Press and Associated Press Managing Editors on the fiscal crisis facing U.S. states and cities, how state and local governments are dealing with severe budget cuts, and how American lives will change because of it. AP reporters collaborated with Education Week writer Sean Cavanagh to produce this story.

And while state economies are showing signs of life—the U.S. Census Bureau released dataRequires Adobe Acrobat Reader last month indicating that state tax revenues improved for the fifth straight quarter—revenues are not rising fast enough to make up for the deep hole created by the recession or for the loss of stimulus money.

Stimulus aid has played a major role in staving off deep cuts in K-12 systems, said Michael Griffith, a senior policy analyst at the Education Commission of the States, in Denver. “It’s not like that money was the icing on the cake. It was the cake.”

And while congressional lawmakers had hoped to cushion the fall for states through their approval last year of a $10 billion Education Jobs Fund, state officials say that money is not sufficient to make up for lost stimulus dollars.

Severe Belt-Tightening

Many state officials do not appear to be inclined to provide relief to districts by compensating for the loss of federal aid. Several governors, including a crop of freshmen elected in November on promises to rein in spending and oppose tax increases, have proposed budgets that would reduce state aid to schools for the coming academic year.

State Spending

States and school districts are required to spend the majority of the federal economic stimulus money they receive by September. States have more time to spend funds provided through the stimulus package’s various competitive grant programs—such as the Race to the Top and Investing in Innovation fund—which in some cases explains why some states have more money left over than others.

One such state is Florida, where Republican Gov. Rick Scott’s budget for fiscal 2011-12 would cut state K-12 funding from $17.3 billion to $16.5 billion, a decrease of about 5 percent. But when the loss of about $872 million in stimulus aid is included, school spending would fall roughly 10 percent from the current year.

The combined weight of those state and federal cuts would force Florida’s Volusia County school district to cut an estimated 900 employees, including teachers, administrators, and clerical staff, said Margaret A. Smith, the system’s superintendent.

The district, which has a total operating budget of about $470 million, also might have to cut back programs in art, music, and physical education, as well as extracurricular and sports programs, she said.

Over the past three years, the 62,000-student district has cut 1,500 positions and $75 million from its budget. It has also sought to chop expenses in unconventional ways, such as by having some of its principals, like Marie Stratton, pull double duty, working in two schools rather than one.

On Mondays and Thursdays, Ms. Stratton can be found at Osceola Elementary School. On Tuesdays and Fridays, she works at Ortona Elementary, a short drive away. She alternates between the schools on Wednesdays. The arrangement requires her to manage two budgets, prepare two sets of reports to the state, evaluate two sets of teachers, and work with parents from two schools.

Ms. Stratton said she prides herself on attending as many after-school student events as she can, but it’s not always possible.

“I’m not kidding you—it’s not easy,” she said. “I want to be an involved principal. ... I’ve never been a good delegater, but I’m delegating a lot.”

Heading into next year, Ms. Stratton said she worries about losing arts and other programs that “teach the whole child.”

Squeezing in Ohio

In Ohio, Gov. John Kasich—a first-year chief executive, like his fellow Republican Mr. Scott—has proposed increasing state aid for schools by 1 percent to 2 percent for each of the next two years.

But when the evaporation of federal stimulus aid is included, the proposal results in a net decrease of 5 percent to 6 percent below current levels, said David Varda, the executive director of the Ohio Association of School Business Officials.

Budget constraints in Volusia County, Fla. mean that school Principal Marie Stratton pulls double duty, working in a pair of schools instead of just one. The 28-year veteran stops by Ortona Elementary School before dawn to sign papers and catch up with a teacher on assignment. She alternates her workdays there with time at Osceola Elementary School, a short drive away.
—Hilda M. Perez for Education Week

Ohio faces a projected $8 billion shortfall in a $56 billion two-year state budget. School districts have spread the stimulus funding out for as long as they could, Mr. Varda said. As that money goes away over the next two years, he’s urging them to take creative steps to control costs, such as by sharing services and pooling resources.

“We can’t do business like we’ve always done,” Mr. Varda said. “There’s nowhere to go to get more money.”

Over the past few years, even as federal stimulus aid rolled in, districts were forced to cut extracurriculars, after-school programs, and elective teaching positions, Mr. Griffith of the ECS said. Many face the prospect of more painful reductions over the next year or two to core academic classes, such as mathematics, reading, and science, he said.

“That’s where it’s going to hit home, [when] parents see class sizes rising,” he said.

Stimulus Streams

Of about $100 billion in total education-focused stimulus aid, about $79 billion was devoted to K-12 programs. The State Fiscal Stabilization Fund, designed to help states restore funding for school programs cut from their budgets because of the recession, accounted for more than half that amount, $48.6 billion. The second- and third-largest chunks of K-12 stimulus aid supported special education programs, at $11.3 billion, and Title 1 programs, which received $10 billion.

The stimulus money has also financed competitive-grant initiatives meant to fuel innovative school improvement, most notably the $4.35 billion Race to the Top program and the $650 million Investing in Innovation program.

But the vast majority of the money was designed to save jobs—which is ultimately essential to protecting the programs and services that schools provide, Mr. Griffith noted. The U.S. Department of Education has estimated that the stimulus funds saved some 368,000 school-related jobs during the 2009-10 school year. ("ARRA Brings Home Mixed Report Card," Feb. 9, 2011.)

Education is “a worker-intensive business,” Mr. Griffith said. “If you’re cutting positions, you’re cutting programs.”

In Tennessee, districts used the federal money in part to add employees, particularly instructional and curricular coaches, said Amanda Anderson, a spokeswoman for the state department of education. Some of those jobs could be at risk when the money dries up, as will some stimulus-funded after-school tutoring programs, she said.

Officials in some states said they encouraged districts to use stimulus funds for purposes that would not bring new costs that they would have to cover when the emergency aid ran out.

Many districts in Missouri, for instance, used special education and Title I stimulus aid to hire temporary tutors and strengthen those programs in other ways, Deputy Commissioner of Education Ron Lankford said. Special education aid also was used for capital-improvement projects designed to make buildings more accessible for students with disabilities, or to buy vehicles to serve those students, he said.

An office staffer at Osceola opens the door for Ms. Stratton. She typically arrives before the teachers and well before the students, starting her day at about 6 a.m. and home about 6 p.m.
—Hilda M. Perez for Education Week

“There was a lot of caution about people employing folks, because when that money is gone, it’s gone,” Mr. Lankford said. “A lot of them did program improvements and short-term employment to address specific issues.”

Similarly, Massachusetts strongly encouraged districts to use at least 50 percent of their Title I stimulus funding on “strategic investments” that would leave long-term benefits for students, said J.C. Considine, a spokesman for the state department of elementary and secondary education.

Most eligible Bay State districts have taken that advice, he said, spending money on professional development for teachers, academic resources for students, and sustaining or expanding supplemental education services for Title I students. Districts also have used stimulus dollars to stave off special education cuts, Mr. Considine added.

Wyoming, a state insulated from much of the recent economic pain by its strong energy industry, has not allocated $10 million of the $82 million in fiscal-stabilization funding it received from the federal government, and is planning to return it, said Jeanne Norman of the state’s Office of State Lands and Investments. The state has spent only about half of its $26 million Title I allocation money and roughly the same portion of $27 million in special education money, the Wyoming education department said.

A few Wyoming districts have used stimulus money to pay for teaching jobs, but more of them have spent it on computer software, student programs, and building maintenance.

Idaho’s stimulus funding saved jobs and restored work days that school employees were going to take off through furloughs, said Melissa McGrath, a spokeswoman for the state education department. But districts have also invested heavily in classroom materials, computer software, and remediation services for students, which will help in the post-stimulus era, she said.

Education Jobs Aid

The vast majority of states are counting on the $10 billion Education Jobs Fund to help them make up for some of the loss of stimulus funding. One exception is South Carolina, which did not receive its $140 million share because of large cuts the state made to higher education, which violated the law’s requirement to maintain spending in that area.

Texas has seen a much larger chunk of jobs aid, $830 million, blocked because state officials have not been able to promise they would meet congressional rules for maintaining future K-12 spending. Texas is suing in federal court to try to secure the money.

In the meantime, the state faces an estimated $27 billion two-year budget shortfall. As many as 65,000 school employees could lose their jobs if state lawmakers’ less generous budget proposal is adopted, the Texas Association of School Administrators estimates.

States that have received education jobs money appear to be on very different schedules for spending it—which by law they can do this academic year or next.

Missouri has not yet spent any of its $190 million share, but is counting on it to make up for shrunken state revenues and the stimulus gap, as is New Jersey, which saved its share to cover the coming academic year.

In Idaho, 50 of the 115 school districts have drawn down a combined $5 million of the state’s $51.6 million allotment. State officials have proposed K-12 budget cuts for next year, so the jobs fund is expected to help make up some of the loss. Massachusetts’ school districts so far have spent about half the state’s $204 million jobs money, to try to cope with ongoing budget woes.

Iowa will receive $97 million through the federal Education Jobs Fund. But that’s not nearly the total amount of education stimulus aid it has received, which will run out this summer, said Jeff Berger, the chief financial officer and government-relations coordinator for the state education department.

In Iowa, stimulus aid saved an estimated 3,500 education jobs—a significant portion of the state’s 33,000 teacher workforce, he noted. Districts will likely face job losses without that money, though the extent of that pain will depend in part on the state’s K-12 budget, which is being debated in the legislature.

Some district officials “are saying it won’t have any impact, and others saying the sky is falling,” Mr. Berger said. “Our experience is that it’s somewhere in between.”

Vol. 30, Issue 27, Pages 1,32-33

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