Fiscal Deadline, Thorny Deficits Bedevil States

By Lesli A. Maxwell — July 10, 2009 5 min read

A handful of recession-ravaged states have kicked off a new fiscal year without balanced budgets, leaving public school educators in limbo as they struggled to manage spending amid dwindling resources and political bickering over unprecedented budget gaps.

The crisis remains most severe in California, which, as of last week, faced a $26.3 billion deficit that Gov. Arnold Schwarzenegger, a Republican, and the Democratic-controlled legislature have been tussling over.

The standoff came to a head over education spending when the governor proposed that lawmakers suspend Proposition 98, the minimum-funding guarantee for public schools that has largely been sacrosanct since voters approved it in 1988.

But California is hardly alone in its fiscal woes. From North Carolina, which remained in budget deadlock last week, to Arizona, where leaders finally sweated out a compromise that preserved K-12 spending, the forecast remains grim, according to Todd Haggerty, a research analyst for the National Conference of State Legislatures, based in Denver.

California Gov. Arnold Schwarzenegger is in a stalemate with lawmakers over how to close that state’s massive budget gap, and school funding is a flash point.

“What’s truly unique about this year is the sheer size of deficits that states are grappling with,” Mr. Haggerty said. “The depth of the recession and the lower-than-expected performance of revenue sources has forced states to look at cuts across the board,” including K-12 education, which accounts for a significant portion of most states’ general-fund spending.

Based on revenue projections from April, the 50 states were facing a collective shortfall of $121 billion for the 2010 fiscal year, a number that will no doubt increase, Mr. Haggerty said.

And there’s little sign that these financial challenges will abate soon. Mr. Haggerty said that 31 states are already projecting budget deficits through fiscal 2011 and that more than half the states have reported that all their major sources of revenue have fallen below expectations.

That poses a big challenge for leaders in states that started the new fiscal year—many July 1—without a budget in place. They must finalize spending plans while seeking to close enormous gaps—and public school spending is at risk.

California Crisis Continues

In the Golden State, schools, including community colleges, have taken massive hits over the recent months, including a $7.3 billion reduction in aid under Proposition 98 for the fiscal year that ended June 30. School leaders were braced for an additional $1.4 billion reduction in spending before June 30, but lawmakers balked.

That prompted the governor to call for suspending Proposition 98 in order to carve nearly $3 billion in education spending out of the fiscal 2010 budget. School spending in the just-ended fiscal year made up 37 percent of the state’s overall $91.4 billion budget.

The mere suggestion of suspending the guarantee raised the ire of the powerful California Teachers Association, which has been an on-again, off-again ally of Mr. Schwarzenegger. The 340,000-member teachers’ union, an affiliate of the National Education Association, had a television advertisement criticizing the governor ready to hit the airwaves late last week, said David A. Sanchez, the union’s president.

“As far as we are concerned, there is no more meat to carve off of this bone,” Mr. Sanchez said in an interview. “Our schools have taken enough cuts.”

Lawmakers in California historically have been reluctant to suspend Proposition 98, which requires a two-thirds vote in both chambers, said Scott P. Plotkin, the executive director of the California School Boards Association. Suspending the guarantee would lower the base for setting spending levels for future years, a prospect that no one relishes, he said.

“All of this has created an unbelievably stressful environment for people who are trying to make decisions about what academic programs are going to look like and for people who work in districts who wonder whether they will have a job,” Mr. Plotkin said.

North Carolina Standoff

In North Carolina, lawmakers and Gov. Beverly Perdue, a Democrat, have been in a stalemate over how to bridge a $4.7 billion gap in a two-year budget proposal. Public schools face a cut of as much as $750 million in a K-12 budget of roughly $8 billion, said Leanne Winner, director of governmental relations for the North Carolina School Boards Association.

“These are large-scale cuts for education in this state,” Ms. Winner said.

At the school district level, teacher assistants in the 3rd grade will be eliminated. Class sizes will increase in grades 4 through 12. And a $38 million program to work with children who score poorly on the state’s end-of-course exams is being scrapped. Districts will lose $129 million in corporate tax revenue for school construction over the cycle of the two-year budget, Ms. Winner said.

The governor has been pushing to raise several taxes, including on cigarettes, in order to come up with $1.5 billion that would help spare education and other social-services programs from even deeper reductions. Lawmakers so far have refused and have extended their negotiations until July 15 as they seek to reach agreement on a budget that should have taken effect July 1.

Common Plight

In Ohio, where the overdue budget is short by $3.2 billion, lawmakers have been fighting over Democratic Gov. Ted Strickland’s proposal to place electronic slot machines at the state’s seven racetracks. The governor is pushing for the slots as a way to raise roughly $900 million over the course of Ohio’s two-year budget cycle that began July 1, but some Senate Republicans are insisting that voters must decide.

Until Gov. Jan Brewer signed three budget-related bills last week to restore K-12 spending, educators in Arizona were facing the prospect of not receiving a regular state aid payment due to them this month under a budget that was supposed to be done by July 1.

Gov. Brewer, a Republican, earlier had vetoed parts of the budget approved by state lawmakers to force them to reconsider placing her proposed sales-tax increase on the ballot in November. Her vetoes eliminated $3.2 billion in funding for K-12 education and—temporarily—put the state out of compliance for billions of dollars in federal economic-stimulus money.

But in Illinois, where lawmakers and Gov. Pat Quinn, a Democrat, remain at odds over finalizing a budget that includes a $9 billion shortfall, K-12 programs are likely to fare better than most other sectors of state government spending, said one education advocate.

“We had a huge budget deficit coming into this fiscal year that everyone realized needed to be filled, so everyone has been braced for bad news,” said Ben Schwarm, the director of governmental relations for the Illinois Association of School Boards. “But so far, despite all of the uncertainty, education spending is a priority, and we’re expecting to see a modest increase in general state aid for K-12.”

The Associated Press contributed to this report.
A version of this article appeared in the July 15, 2009 edition of Education Week as Fiscal Deadline, Thorny Deficits Bedevil States


Jobs The EdWeek Top School Jobs Virtual Career Fair
Find teaching jobs and other jobs in K-12 education at the EdWeek Top School Jobs virtual career fair.
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.
Student Well-Being Webinar
Embracing Student Engagement: The Pathway to Post-Pandemic Learning
As schools emerge from remote learning, educators are understandably worried about content and skills that students would otherwise have learned under normal circumstances. This raises the very real possibility that children will face endless hours
Content provided by Newsela
Teaching Live Online Discussion How to Develop Powerful Project-Based Learning
How do you prepare students to be engaged, active, and empowered young adults? Creating a classroom atmosphere that encourages students to pursue critical inquiry and the many skills it requires demands artful planning on the

EdWeek Top School Jobs

Teacher Jobs
Search over ten thousand teaching jobs nationwide — elementary, middle, high school and more.
View Jobs
Principal Jobs
Find hundreds of jobs for principals, assistant principals, and other school leadership roles.
View Jobs
Administrator Jobs
Over a thousand district-level jobs: superintendents, directors, more.
View Jobs
Support Staff Jobs
Search thousands of jobs, from paraprofessionals to counselors and more.
View Jobs

Read Next

Federal LGBTQ Students Are Protected by Federal Anti-Discrimination Law, Education Dept. Says
Schools violate Title IX when they discriminate against students based on sexual orientation or gender identity, the agency said Wednesday.
4 min read
Demonstrators gather on the step of the Montana State Capitol on March 15, 2021 protesting anti-LGBTQ+ legislation in Helena, Mont. The Montana Senate Judiciary Committee voted March 18 to advance two bills targeting transgender youth despite overwhelming testimony opposing the measures. The measures would ban gender affirming surgeries for transgender minors and ban transgender athletes from participating in school and college sports. Both bills have already passed the Montana House. They head next to votes by the GOP-controlled Montana Senate.
Demonstrators gather on the steps of the Montana State Capitol in March to protest bills on transgender students' ability to play on single-sex sports teams.
Thom Bridge/Independent Record via AP
Federal Republicans Want Federal Funding Cuts to Schools Using '1619 Project'—But There's a Twist
A bill from U.S. Sens. Tom Cotton, Mitch McConnell, and others targets schools using lessons based on the New York Times Magazine series.
4 min read
Sen. Tom Cotton, R-Ark., speaks during a Senate Judiciary Committee hearing on voting rights on Capitol Hill in Washington, Tuesday, April 20, 2021.
Sen. Tom Cotton, R-Ark., speaks during a Senate Judiciary Committee hearing on voting rights on Capitol Hill.
Evelyn Hockstein/AP
Federal What's at Stake in a Review of Federal Sex Discrimination Protections for Students
The Biden administration's review of Title IX may prompt new guidance on how schools deal with sexual harassment and protect LGBTQ students.
10 min read
Image of gender symbols drawn in chalk.
Federal Opinion Education Outlets Owe Readers More Than the Narratives They Want to Hear
It's vital that serious news organizations challenge runaway narratives and help readers avoid going down ideological rabbit holes.
4 min read
Image shows a multi-tailed arrow hitting the bullseye of a target.
DigitalVision Vectors/Getty