States

States’ Fiscal Outlook Is Still Gloomy

By Alyson Klein — June 07, 2010 3 min read
  • Save to favorites
  • Print

State finances remain as bad as they have been in decades, and the fiscal picture isn’t likely to clear up anytime soon, according to a report released last week by the National Governors Association and the National Association of State Budget Officers.

The 2011 fiscal year is shaping up to be the toughest since the recession began, the groups say: A majority of states are contemplating cutting K-12 education.

“I think there’s a sense that [states] have maxed out on tax increases, but we’re also going into a political year,” said Raymond C. Scheppach, the executive director of the Washington-based NGA. He speculated that states would largely balance their budgets by trimming spending.

But after years of cuts, states don’t have many choices left, Mr. Scheppach said.

“States have already gotten the low-hanging fruit, the medium-hanging fruit, and the difficult fruit,” he added.”From here on out, things are going to be very, very difficult.”

He said he expected significant layoffs of state employees, despite signs of job growth in the private sector.

Cuts in spending on schools are increasingly likely. Governors and state lawmakers have been trying to protect K-12 education and health care, but that just might not be possible anymore, according to Scott Pattison, the executive director of NASBO, which is based in Washington.

States “disproportionately cut a lot of areas in state government while attempting to keep health care and education [from facing severe reductions],” Mr. Pattison said at a press conference held last week to discuss the findings. “I’m not sure if every state can continue to do that.”

Continuing Slide

State general-fund spending has declined an unprecedented two years in a row, in both fiscal 2009 and 2010, the report found. It estimates that fiscal 2010 general-fund expenditures will total $612.9 billion among all the states, down from $657.9 billion in the previous fiscal year—an 8 percent decline. In their budget requests, 13 governors proposed spending less in 2011 than in 2010. Overall, 44 states estimate that they will be spending less from their general funds in fiscal 2010 than they did in fiscal 2008, the last year before the recession struck.

The reduction in general-fund spending was linked to a major drop in revenue, including from sales, personal-income, and corporate taxes. The report estimates that revenue collections from those sources fell 11.8 percent from fiscal 2008 to fiscal 2010. (The report does not give comparisons for local property taxes, which are an important revenue source for education in some states.)

Midyear budget cuts, typically considered an option of last resort, have been widespread in fiscal 2010, according to the report. Forty states made midyear cuts in the current fiscal year, totaling $22 billion.

The report argues that figure is significant, compared with the previous economic downturn, when 37 states made $12 billion in midyear reductions in fiscal 2003.

Despite governors’ efforts to protect funding for schools, 34 states have cut spending on elementary and secondary education in fiscal 2010, while 36 states have made cuts to higher education.

What’s more, 31 states have proposed cutting K-12 in fiscal 2011. The proposed cuts for education amount to a total of about $5.5 billion, out of about $22.2 billion in proposed reductions. And 31 states have proposed cutting higher education on top of the K-12 cuts.

Funding Cliff

The $787 billion American Recovery and Reinvestment Act, approved by Congress last year to provide a jolt to the economy, helped make a bad situation more tenable, the report says.

Because of the economic-stimulus measure, the federal share of state spending jumped to 30 percent in fiscal 2009 from 26.3 percent in fiscal 2008. But the stimulus aid was only for fiscal years 2009 and 2010. States would likely be in even worse shape without it, the report concludes.

Mr. Scheppach said his organization is hoping Congress will provide an additional $24 billion in Medicaid funds, which eat up a large portion of state budgets. That legislation is pending in Congress, he said.

But the NGA isn’t pushing for a separate $23 billion measure to stave off education layoffs that is championed by Sen. Tom Harkin, D-Iowa, the chairman of the Senate subcommittee that oversees education spending, and Rep. David R. Obey, D-Wis., the chairman of the House Appropriations Committee. (“Education Jobs Bill Faces Tough Climb in Congress,” June 4, 2010.) Mr. Scheppach said that’s because of concerns from some governors about the legislation’s impact on the federal deficit.

A version of this article appeared in the June 09, 2010 edition of Education Week as States’ Fiscal Outlook Is Still Gloomy

Events

Jobs Virtual Career Fair for Teachers and K-12 Staff
Find teaching jobs and other jobs in K-12 education at the EdWeek Top School Jobs virtual career fair.
English-Language Learners Webinar English Learners and the Science of Reading: What Works in the Classroom
ELs & emergent bilinguals deserve the best reading instruction! The Reading League & NCEL join forces on best practices. Learn more in our webinar with both organizations.
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
Teaching Webinar
Challenging the Stigma: Emotions and STEM
STEM isn't just equations and logic. Join this webinar and discover how emotions fuel innovation, creativity, & problem-solving in STEM!
Content provided by Project Lead The Way

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

States Q&A How Districts Can Navigate Tricky Questions Raised by Parents' Rights Laws
Where does a parent's authority stop and a school's authority begin? A constitutional law scholar weighs in.
6 min read
Illustration of dice with arrows and court/law building icons: conceptual idea of laws and authority.
Andrii Yalanskyi/iStock/Getty
States What 2024 Will Bring for K-12 Policy: 5 Issues to Watch
School choice, teacher pay, and AI will likely dominate education policy debates.
7 min read
The U.S. Capitol is seen in Washington, Monday, Feb. 6, 2023. President Joe Biden on Tuesday night will stand before a joint session of Congress for the first time since voters in the midterm elections handed control of the House to Republicans.
The rising role of artificial intelligence in education and other sectors will likely be a hot topic in 2024 at the U.S. Capitol in Washington, as well as in state legislatures across the country.
Mariam Zuhaib/AP
States How a Parents' Rights Law Halted a Child Abuse Prevention Program
State laws that have passed as part of the parents' rights movement have caused confusion and uncertainty over what schools can teach.
7 min read
People hold signs during a protest at the state house in Trenton, N.J., Monday, Jan. 13, 2020. New Jersey lawmakers are set to vote Monday on legislation to eliminate most religious exemptions for vaccines for schoolchildren, as opponents crowd the statehouse grounds with flags and banners, including some reading "My Child, My Choice."
People hold signs during a protest at the state house in Trenton, N.J., on Jan. 13, 2020, opposing legislation to eliminate most religious exemptions for vaccines for schoolchildren. In North Carolina, a bill passed to protect parents' rights in schools caused uncertainty that led two districts to pause a child sex abuse prevention program out of fear it would violate the new law.
Seth Wenig/AP
States More States Are Creating a 'Portrait of a Graduate.' Here's Why
A portrait of a graduate is a guiding document outlining a vision of what it means to be a successful student.
8 min read
Image of attributes of a graduate.
Parker Shatkin for Education Week with iStock/Getty