Find your next job fast at the Jan. 28 Virtual Career Fair. Register now.
Blog

Your Education Road Map

Politics K-12®

ESSA. Congress. State chiefs. School spending. Elections. Education Week reporters keep watch on education policy and politics in the nation’s capital and in the states.

Education

Coronavirus Impact Puts Spotlight on States’, Districts’ ‘Rainy Day’ Funds

By Daarel Burnette II — March 20, 2020 3 min read

Since the Great Recession, school districts, legislatures, and teacher unions have been at war with each other over whether states and districts should spend or save.

There are critical teacher shortages in some areas, buildings are falling apart and unsafe for kids, and test scores aren’t what they should be, many argued. Let’s hurry up and raise teacher pay, take out bonds, and spend money on things that boost academic achievement.

But more fiscal conservatives, traumatized by the last recession, have argued in favor of squirreling away cash in case another recession hits. Don’t folks remember the rounds and rounds and rounds of layoffs districts suffered, they ask?

That recession, many analysts predict, may now loom with the rapid spread of the coronavirus and the expected hit to state revenues.

Already, states and districts across the country are reaching into their piggy banks to spend on a host of unexpected costs: makeshift child-care centers, distance learning programs, and sanitizing products.

Analysts say the districts that will feel the most financial pain for at least the next two school years will be the ones in states and districts that have very little money in their savings account. Others will be better cushioned.

After the last recession between 2007 and 2009, some state legislatures, including in Arizona, California, and Maryland, created laws that increased the amount of money state and their school districts must keep in their savings account.

Many, such as Arizona, went further and shoveled surplus dollars into their reserves.

“This is a success story for a lot of states,” said Josh Goodman, a senior officer for The Pew Charitable Trusts, who has analyzed the impact the coronavirus could have on state budgets. “The last recession showed them that they need to be saving more and they moved aggressively to increase their savings.”

For other states, including Illinois, Kansas,and New Jersey, analysts warn of tough days ahead.

On the district front, savings accounts have taken on political heat the last two years as teachers bristled at the millions of dollars superintendents had stashed away in preparation for the next recession.

Los Angeles teachers last year, angry that the district had stored more than $1.9 billion in its savings account, went on strike, demanding that the district use some of that money to provide them with a pay raise, smaller class sizes, and wraparound services for students.

Credit rating agencies typically advise districts to keep at least 15 percent of their revenue in savings, though that amount varies widely. Palmyra-Eagle in southeast Wisconsin, has carried forward from one fiscal year to the next as little as 7 percent of its savings, while Twin Lakes School district on the other side of Wisconsin has carried over as much as 55 percent.

All this week, politicians, advocates, school board members, teachers and superintendents have been either praising or demonizing savings accounts.

In Arizona, the epicenter of the nation’s #RedForEd movement, Republican Gov. Doug Ducey has more than doubled the state’s savings amount from $445 million in 2015 to $1 billion. This week, Ducey’s administration started dipping into that fund to wage a war against the coronavirus.

Republican state Rep. Mark Finchem, who once was opposed to keeping so much of the state’s budget in savings said to the Arizona Capitol Times, “I’m somewhat ambivalent at this point. The money is there, but I pray that we are cautious, very cautious and prudent about how we extend those resources for the greatest community.”


Follow us on Twitter @PoliticsK12. And follow the Politics K-12 reporters @EvieBlad @Daarel and @AndrewUjifusa.

Events

Teaching Live Online Discussion A Seat at the Table With Education Week: How Educators Can Respond to a Post-Truth Era
How do educators break through the noise of disinformation to teach lessons grounded in objective truth? Join to find out.
This content is provided by our sponsor. It is not written by and does not necessarily reflect the views of Education Week's editorial staff.
Sponsor
School & District Management Webinar
The 4 Biggest Challenges of MTSS During Remote Learning: How Districts Are Adapting
Leaders share ways they have overcome the biggest obstacles of adapting a MTSS or RTI framework in a hybrid or remote learning environment.
Content provided by Panorama Education
Student Well-Being Online Summit Keeping Students and Teachers Motivated and Engaged
Join experts to learn how to address teacher morale, identify students with low engagement, and share what is working in remote learning.

EdWeek Top School Jobs

Join us for our NBOE 2021 Winter Teacher Virtual Interview Fair!
Newark, New Jersey
Newark Public Schools
Join us for our NBOE 2021 Winter Teacher Virtual Interview Fair!
Newark, New Jersey
Newark Public Schools
Superintendent, Dublin Unified School District
Dublin, California (US)
Hazard, Young, Attea & Associates
Superintendent, Dublin Unified School District
Dublin, California (US)
Hazard, Young, Attea & Associates

Read Next

Education Briefly Stated Briefly Stated: January 13, 2021
Here's a look at some recent Education Week articles you may have missed.
8 min read
Education Obituary In Memory of Michele Molnar, EdWeek Market Brief Writer and Editor
EdWeek Market Brief Associate Editor Michele Molnar, who was instrumental in launching the publication, succumbed to cancer.
5 min read
Education Briefly Stated Briefly Stated: December 9, 2020
Here's a look at some recent Education Week articles you may have missed.
8 min read
Education Briefly Stated Briefly Stated: Stories You May Have Missed
A collection of articles from the previous week that you may have missed.
8 min read