State Journal

August 07, 2002 1 min read

Tough Year

The final budget numbers are coming in from the states for fiscal 2002. And, not surprisingly, they don’t look good. The question now is, will they be even worse this time next year?

A preliminary report released July 24 by the National Conference of State Legislatures found 12 of the 42 states that reported data had cut education spending to make up budget shortfalls in fiscal 2002, which ended June 30 for most states.

It’s no wonder. The Denver-based group also reported that by June 30, 46 states had accumulated $37.2 billion in budget gaps—the difference between dollars coming in and dollars going out.

Several states protected education and other areas from more reductions by dipping into rainy-day reserves, collectively lowering those levels from $16.5 billion to $10.8 billion between the 2001 and 2002 fiscal years.

Connecticut and New Jersey effectively wiped out their reserves, while Utah’s went from $123 million to $10 million.

Here’s how NCSL budget-watchers summarized the situation: “FY 2002 was tumultuous in nearly every state in the nation. The fiscal boom of the late 1990s that had begun to sputter in early 2001 came to a screeching halt by the end of the year.”

Looking ahead, fiscal 2003 may be even tougher on education and other spending areas. Based on initial estimates, the budget gap for the 40 states that reported 2003 data is projected to hit $58 billion.

As bad as that sounds, K-12 funding is expected to rise by 4.8 percent in this fiscal year over last year, the report predicts—even as 26 states report cutting overall spending.

Arturo Pérez, a program principal with NCSL who helped write the NCSL report, warned that the 4.8 percent figure might be less than it appears.

“I’m inclined to think that will drop as more states report,” he said. “Besides, this can be misleading simply because the base is less. [Kindergarten through 12th grade] spending was cut over the preceding year.”

—Robert C. Johnston

A version of this article appeared in the August 07, 2002 edition of Education Week