Education Funding

A Snapshot of the States’ Fiscal Health

October 31, 2001 12 min read
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Since the nation’s economy was dealt a severe blow by the terrorist attacks of Sept. 11, the fiscal situations of many states have deteriorated. Below are brief summaries of the budget picture in the 50 states and how K-12 education is being affected.

Alabama: For the second year in a row, the state may have to make midyear cuts in aid to education. School leaders have been warned to prepare for a possible cut of up to 4 percent. But Gov. Donald Siegelman has said he will likely convene a special session soon to find more money for schools.

Alaska: The state is in good fiscal shape and plans no cuts in its $7.4 billion budget. Price hikes in oil have helped buoy tax collections in the state.

Arizona: Confronting a two-year deficit of up to $1.6 billion, the legislature is slated to hold a special session next month to balance the budget. While some lawmakers view education as off-limits, others want to cut the $14 billion, two-year schools budget.

Arkansas: A revenue forecast expected next month will help signal whether the current budget is out of balance. Under a state law that prohibits deficit spending, K-12 programs would have to absorb 37 percent of any overall budget cuts.

California: Facing a projected budget gap of up to $14 billion over this fiscal year and the next, Gov. Gray Davis has ordered a state hiring freeze and asked Cabinet members to identify $150 million in immediate budget cuts. Officials say it is unclear whether schools will be affected.

Colorado: Colorado’s estimated budget shortfall this year tops $350 million, and the state has already taken steps to cut spending. But K-12 education appears likely to be spared, thanks to a 2000 referendum that required increased spending on public schools.

Connecticut: Gov. John G. Rowland has called for a special session in November to discuss a budget shortfall for this fiscal year, currently projected at $300 million. Among the programs being eyed for possible savings are grants for expanding early-childhood programs and state subsidies for local school construction projects.

Delaware: State officials asked a special budget committee to meet last week, two months earlier than usual, to address lower-than-expected revenues. Some lawmakers were predicting a special session, but as of last week, officials had not called for cuts in this year’s $773 million schools budget.

Florida: In the face of a projected revenue shortfall of $1.3 billion for this fiscal year—precipitated partly by a steep falloff in tourism after Sept. 11—lawmakers opened a special session last week to find ways to balance the budget. With sizable cuts in state education aid on the table, school leaders across the state were taking steps to pare spending.

Georgia: Because of a drop in revenues, the current education budget is being cut by 2.5 percent, or $1.4 million. Certain education programs are being exempted, though, such as the basic funding formula for schools.

Hawaii: No cuts had been made in the education budget as of last week, but legislators, who opened a special session Oct. 22, asked Gov. Benjamin Cayetano to cut 5 percent from the budgets of all departments due to lower-than-expected revenues. It was possible that those cuts would exclude regular funding for schools.

Idaho: In August, Gov. Dirk Kempthorne made budget cuts that reduced funding for local public schools and the state schools for the deaf and blind by 1.5 percent. Those reductions trimmed $14 million from the $869.5 million K-12 budget.

Illinois: Lawmakers plan to cut the state budget next month during their annual fall “veto” session, to cope with an expected shortfall this fiscal year of $350 million. It’s not expected that the $6.22 billion precollegiate education budget will be cut. But state education officials say they are voluntarily tightening their belts by taking such steps as restricting travel, workshops, and hiring.

Indiana: Fiscal problems have worsened since state legislators drew up a two-year budget for the period ending June 30, 2003, which they already considered tight. The state’s elected schools chief is aiming to match the 7 percent cut being made in agencies under the governor’s control.

Iowa: Gov. Tom Vilsack has ordered a 4.3 percent across-the-board cut—including K- 12 education—in response to a nearly $160 million shortfall. A special session is planned for Nov. 8 to restore funds for such priorities as per-pupil school aid.

Kansas: Lawmakers have not reduced this year’s $2.4 billion budget for K-12 education. To date, legislators say they are committed to preserving that funding.

Kentucky: Although they are forecasting a roughly $467 million shortfall in fiscal 2002 revenues, state leaders are planning no cuts in the education budget. But the state will use any excess property-tax proceeds to balance the budget this year, rather than pass any surplus on to districts.

Louisiana: At the moment, the state is not facing budget problems, though analysts caution the situation could change. Even if such difficulties crop up, state officials say it is unlikely that this year’s education budget will suffer.

Maine: With revenues running well behind projections, Gov. Angus King has ordered spending cuts that exempt general- purpose aid to schools, along with many other budget items. But other programs in the department of education are subject to the governor’s order directing agencies to freeze budgeted funds that haven’t already been spent and to reduce other expenses by 2 percent.

Maryland: Citing falling revenues and higher security costs after Sept. 11, Gov. Parris N. Glendening this month announced a $205 million cut in the current year’s $21.2 billion state budget. The state schools chief called the cuts—from a hiring freeze, a 1.5 percent cut in all state agencies, and deferral of capital projects—"very difficult.”

Massachusetts: Approaching the legislature’s Nov. 21 adjournment still lacking a budget for the fiscal year that began in July, state officials are expecting lawmakers to reduce acting Gov. Jane Swift’s proposed $22.6 billion spending plan by some $1 billion. But education, seen as a top priority, is not expected to be heavily affected.

Michigan: A bill was moving through the legislature last week that would shore up this year’s pared-down education budget with more than $300 million from the state’s rainy-day fund. This fall, the legislature substituted its own cuts, including to a number of state-sponsored education programs, for the 5 percent across-the- board reduction in basic aid to school districts that Gov. John Engler made last summer as tax revenues came in short.

Minnesota: The economic slowdown and its attendant drop in revenues come as Minnesota is carrying out a new law that shifts most basic costs of precollegiate education to the state. Numbers for post-Sept. 11 revenue won’t be available until early next month, and Gov. Jesse Ventura won’t release specifics on budget cuts until January.

Mississippi: Gov. Ronnie Musgrove may need to issue a budget- cutting directive if figures expected this week show revenues falling short by more than 2 percent, officials say. If cuts are made in the current budget, precollegiate education may take less of a hit than other agencies, based on past efforts by policymakers to spare schools.

Missouri: The economy had already been flagging before Sept. 11, prompting Gov. Bob Holden to trim the budget by $323 million in August. Those reductions included $3.1 million from the education department, eliminating plans to test all 5th graders in fine arts in the 2002 school year. More cuts may be in store, state officials warn.

Montana: Officials have no plans to cut the education budget at this time. General-fund spending on K-12 schools rose by 2.73 percent for the biennium that began last summer.

Nebraska: The impact of the terrorist attacks deepened an expected $40 million revenue shortfall to $220 million, leaving a roughly 4 percent hole in the budget. Last week, legislators began meeting in a special session to trim the budget. Public schools, which receive 30 percent of state spending, are not exempt from cuts.

Nevada: As they watch the economic downturn play out, state leaders have yet to decide whether to cut the biennial education budget that ends in 2003. But some one-time appropriations made this year are being put on hold—including money for teacher pay raises, districts’ health-insurance and utility costs, and school technology.

New Hampshire: Unlike most states, the Granite State ended its fiscal year on Sept. 30 with a surplus. Still, Gov. Jeanne Shaheen has asked all state agencies, including the education department, to prepare contingency plans to reduce spending by 1 percent for the 2001-02 fiscal year.

New Jersey: State revenue is coming in lower than anticipated, so $350 million in spending for the 20001-02 fiscal year has been put on hold. That includes $10 million for teacher retirements, and another $650,000 that was part of a supplemental fund for school district emergencies. Policymakers continue to assess the fallout from the Sept. 11 attack in nearby New York City.

New Mexico: No changes are expected in the budget for fiscal 2001-02, with the possible exception of a reduction in capital-outlay funds for schools, owing to a drop in certain tax collections.

New York: Analysts say the state could lose as much as $9 billion in revenue as a result of the Sept. 11 attack on the World Trade Center. Nonetheless, the legislature passed a supplemental budget on Oct. 24 that would add $200 million to the “bare bones” school aid package approved in August. Even if Gov. George E. Pataki signs that measure, as is expected, many districts confront serious budget problems, with some facing the prospect of widespread layoffs.

North Carolina: After state officials finally reached agreement this fall on a biennial budget that raised taxes to cope with falling revenues, Gov. Michael F. Easley directed agencies to identify 4 percent in cuts because of further revenue slippage. The cuts are expected to entail primarily administrative reductions for education.

North Dakota: Revenues are down slightly, but not enough to precipitate cuts. So far left intact is a biennial schools budget of $855 million.

Ohio: Projections call for a $709 million budget shortfall this fiscal year, at the same time the state must respond to a recent court ruling demanding that it pump $1.2 billion more into K-12 schools over two years. On Oct. 16, Gov. Bob Taft announced that budgets for most state agencies this fiscal year would be cut by 6 percent, but that state education spending would be exempt.

Oklahoma: Even though revenue projections are below forecasts, state leaders are not planning to cut this year’s budget. The state’s $2.06 billion budget for precollegiate education should remain intact.

Oregon: State education officials have yet to say how they will respond to a directive from the governor requiring all agencies to draw up new proposed budgets to close a $300 million revenue shortfall in the fiscal 2002-03 biennium. Among programs in line for possible reductions is Gov. John Kitzhaber’s newly approved $220 million School Improvement Fund for boosting early reading skills.

Pennsylvania: As one of his last acts as governor before joining President Bush’s administration early this month, Tom Ridge froze $200 million in state spending after first- quarter revenue came in 2.9 percent below estimates. The freeze includes money appropriated for school district demonstration projects, science education, and school technology. Gov. Mark S. Schweiker, who took over Oct. 5, can opt to reinstate the spending.

Rhode Island: In the face of falling revenues, Gov. Lincoln C. Almond issued an order last week asking all state agencies, including the education department, to “limit expenditures to those that are absolutely essential.” The fiscal picture is due to come into clearer focus next month when a legislative revenue-estimating committee convenes.

South Carolina: Because state revenues are running behind, economic forecasters predicted Oct. 18 that the state must slice $310 million from the current budget—a cut that may force 4 percent budget reductions in each state agency, including the department of education. Officials warn that such a cut could mean layoffs and other austerity measures.

South Dakota: Neither Gov. William J. Janklow nor legislators have publicly discussed the possibility of budget cuts for this year. If revenue shortfalls arise, two reserve funds could be tapped, so talk about cuts is seen as premature.

Tennessee: Even before Sept. 11, state officials were looking to cut the budget the legislature adopted over Gov. Don Sundquist’s veto in August. So far, the education department has cut $15 million from its $2.6 billion budget, including 16 jobs and 29 percent of its operating expenses, a host of discretionary programs, 50 percent of the money allotted for low-performing schools, and test-development aid.

Texas: The Lone Star State appears to be in decent fiscal shape at present, with no plans for cutbacks. Revenue collections are so far sticking close to projections, posing no threat to the $24.7 billion, two-year education budget approved this year.

Utah: By mid-October, the state was running $177 million in the red, prompting Gov. Michael O. Leavitt to call for tapping half the state’s $120 million rainy-day fund. Still, each department is being asked to cut back, although state officials do not anticipate tax increases or layoffs of state workers.

Vermont: With revenues down across the board, Gov. Howard Dean has told the education department to cut 4.2 percent, about $600,000, from its fiscal 2002 budget. The agency so far has instituted a hiring freeze and ceased out-of- state travel. It has also rescinded a new grant for teacher quality that had not yet been given out.

Virginia: Through executive order, Gov. James S. Gilmore III last spring directed all state agencies, including the education department, to cut their budgets for the current fiscal year. Education officials are not releasing details about the exact amount they trimmed from their biennial budget that ends next year, but say state jobs and school aid were spared.

Washington: Facing a large hole in this year’s budget, the legislature is due to start work in January on a supplement to the two-year spending plan that took effect in July. Gov. Gary Locke recently proposed reductions of 15 percent for most large state agencies, except education. The actual cuts are not yet known, but much K-12 funding is considered “basic education” and is protected by court decisions.

West Virginia: No cuts are on the horizon, either for the $2.8 billion general-revenue budget for fiscal 2001-02, or for the $1.47 billion spending plan for schools.

Wisconsin: Lawmakers are projecting a $1 billion budget deficit over the next biennium, but so far the state has not cut current funding for K-12 education. Gov. Scott McCallum did use his line-item-veto power more than 300 times before signing the two-year budget in August to save $63 million, more than half of which came from education initiatives.

Wyoming: In contrast to many other states, Wyoming has an estimated $158 million revenue surplus. As a result, the state won’t cut its $3.6 billion budget this biennium, which ends next June.

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