Federal

States’ K-12 Efforts Feeling Budget Sting

By Linda Jacobson — October 20, 2008 6 min read
BRIC ARCHIVE
  • Save to favorites
  • Print

States are struggling—and sometimes failing—to hold the line on education budget cuts and day-to-day disruption in the face of budget deficits, flagging tax revenues, and credit jitters that threaten their cash flow.

The situation varies around the country. In deficit-strapped California, for example, officials last week had some success in selling billions of dollars in short-term notes needed to keep the state from running out of money for schools and other state services.

But Massachusetts Gov. Deval Patrick, a Democrat, last week ordered state agencies to cut more than $1 billion to close a $1.4 billion deficit, including $3 million from kindergarten expansion and $1 million from Head Start preschool programs.

Maryland Gov. Martin O’Malley, a Democrat who is trying to plug a projected $1 billion deficit, said the state may have to weigh reductions in local school aid provided under a formula that gives extra money to areas where the cost of education is high.

And in Hawaii, the state board of education on Oct. 9 approved more than $46 million in cuts from its $2.1 billion K-12 budget on the way toward meeting Republican Gov. Linda Lingle’s instruction that each state agency trim spending by up to 20 percent.

“This situation is as bad as I’ve ever seen it,” William T. Pound, the executive director of the Denver-based National Conference of State Legislatures, said in an Oct. 13 press release. “States have been confronted with bad economic circumstances in the past, but not so many and all at once.”

Revenue Declines

Even states that previously were not expecting budget shortfalls are beginning to see lower-than-projected tax revenues and adjusting their current budgets accordingly.

An April state fiscal survey, released by the Washington-based National Association of State Budget Officers, showed that tax collections in Kansas during fiscal 2008 came in even higher than expected. But that additional income hasn’t been enough to withstand the current economic downturn.

Gov. Kathleen Sebelius, a Democrat, has taken a 2 percent midyear cut from higher education institutions in the state. And a 5 percent cut is expected for fiscal 2010.

Utah was in a similar revenue position midway through the 2008 fiscal year, according to the same report. But Gov. Jon M. Huntsman Jr., a Republican, and state lawmakers met in a special session last month to settle on reductions that would close a $272 million hole in the state’s $13 billion budget for fiscal 2009. Spending cuts of about 3 percent were taken from most state agencies, but K-12 schools were spared, at least for now.

In Maryland, the budget picture—and its potential impact on schools—is a key part of the debate over a Nov. 4 ballot measure that would allow slot machines in the state, potentially raising $650 million a year for education. Gov. O’Malley is urging voters to approve the measure. (“States Roll Dice on New Funding,” Oct. 15, 2008.)

Meanwhile, the state has made education cuts that include abolishing vacant positions, delaying an assessment for two more years, and reducing school improvement funds by 25 percent, to $8.6 million.

“Maryland faces a very real budget problem, and funding reductions are necessary throughout government when tax revenues decline,” state Superintendent Nancy S. Grasmick said in a statement.

So far, schools have avoided cuts in Virginia, where Gov. Tim Kaine, a Democrat, is laying off 570 state employees in trying to close an almost $1 billion deficit in the $37 billion fiscal 2009 budget.

But he has also suggested that schools could be targeted if economic conditions don’t improve for fiscal 2010, when a $1.5 billion deficit is already projected.

“Anything you do now affects the delivery of services to children,” said Charles Maranzano Jr., the superintendent of the 4,700-student Dinwiddie County public schools in Virginia. He added that he regrets that he’s already had to tell principals to cut field trips from three per year down to one, saying, “there is only so much you can do within the four walls of the classroom.”

Last week, Mr. Maranzano and superintendents across the state met in a legislative conference to discuss how to address potential cuts for next year. They may ask the governor to relax some school achievement targets if personnel cuts need to be made.

‘Calm at the Moment’

A few states, however, have still been able to stay above the economic turmoil.

“I suspect we’re in better shape than some states,” said Debbie Ratcliffe, a spokeswoman for the Texas Education Agency. The K-12 education budget in Texas is $36.9 billion in the 2008-09 biennium, in an overall state budget of $167 billion. “Everyone is calm at the moment.”

High oil prices and an increase in natural-gas production have kept the state’s economy growing, according to Susan Combs, the state comptroller.

While the success of the federal government’s Wall Street rescue plan probably won’t be clear for some time, there were signs last week that the situation had improved somewhat in the municipal-credit market, at least where California was concerned.

Earlier this month, Gov. Arnold Schwarzenegger, a Republican, warned federal officials that the state might need a $7 billion emergency loan if it was unable to sell the tax revenue anticipation notes it needed to keep cash flowing.

As of Oct. 16, however, the state had been able to sell $5 billion of the short-term notes—most of them to individual investors—after an aggressive pitch by state officials that included advertisements by Gov. Schwarzenegger, who bought $100,000 of the notes.

“Although California feels the enormous effects of our current economic crisis, I am optimistic that these efforts to improve liquidity are moving the country toward more stable economic footing,” the governor said in an Oct. 9 letter.

While a loan from the federal government might still be in the future for California, the state controller’s office is “still continuing to make payments that are scheduled,” spokesman Jacob Roper said.

Roughly $2.3 billion is due to school districts at the end of October, but Mr. Roper said covering state services during the fall months shouldn’t be a problem.

“The end of October doesn’t pose the biggest dip in cash flow that we’re expecting,” he said. “It’s March when the largest dip in cash flow comes.”

Drawing on Reserves

The revenue fluctuations and cash flow concerns are reasons why some states have given attention to so-called “rainy day” funds.

In Virginia, Gov. Kaine noted that his plan to draw $400 million from the state’s Revenue Stabilization Fund allowed him to avoid cutting money from the state’s education budget at this point.

“This action avoids a devastating impact on classrooms with the school year already under way,” the governor said.

Gov. Schwarzenegger has said that if California lawmakers had agreed to create such a fund years ago, the state would now have reserves to fall back on.

After a record-setting delay in passing the fiscal 2009 budget in California, legislators agreed to create a fund of the kind favored by the governor. But voters will still have to approve it, probably in a special election next year. (“California Budget Passed, Signed,” Oct. 1, 2008.)

The Associated Press contributed to this article.
A version of this article appeared in the October 22, 2008 edition of Education Week as States’ K-12 Efforts Feeling Budget Sting

Events

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
IT Infrastructure Webinar
A New Era In Connected Learning: Security, Accessibility and Affordability for a Future-Ready Classroom
Learn about Windows 11 SE and Surface Laptop SE. Enable students to unlock learning and develop new skills.
Content provided by Microsoft Surface
Classroom Technology K-12 Essentials Forum Making Technology Work Better in Schools
Join experts for a look at the steps schools are taking (or should take) to improve the use of technology in schools.
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
Budget & Finance Webinar
The ABCs of ESSER: How to Make the Most of Relief Funds Before They Expire
Join a diverse group of K-12 experts to learn how to leverage federal funds before they expire and improve student learning environments.
Content provided by Johnson Controls

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 Lawmakers, Education Secretary Clash Over Charter School Rules
Miguel Cardona says the administration wants to ensure charters show wide community interest before securing federal funding.
5 min read
Education Secretary Miguel Cardona speaks during the 2022 National and State Teachers of the Year event in the East Room of the White House in Washington, Wednesday, April 27, 2022.
U.S. Secretary of Education Miguel Cardona, is seen during a White House event on April 27. The following day, he defended the Biden administration's budget proposal on Capitol Hill.
Susan Walsh/AP
Federal Opinion What If We Treated Public Education Like the Crisis It Is?
A former governor warns that without an overhaul, education's failures will cost the nation dearly.
Bev Perdue
5 min read
Conceptual Illustration of the sun rising behind a broken down school building
iStock/Getty
Federal What the Research Says Education Research Has Changed Under COVID. Here's How the Feds Can Catch Up
Adam Gamoran, chairman of a National Academies panel on the future of education research, talks about the shift that's needed.
5 min read
Graphic shows iconic data images all connected.
iStock/Getty Images Plus
Federal 7 Takeaways for Educators From Biden's State of the Union
What did President Joe Biden say about education in his first State of the Union address to Congress? Here's a point-by-point summary.
3 min read
President Joe Biden delivers his first State of the Union address to a joint session of Congress at the Capitol, Tuesday, March 1, 2022, in Washington as Vice President Kamala Harris applauds and House speaker Nancy Pelosi of Calif., looks on.
President Joe Biden delivers his first State of the Union address to a joint session of Congress, with Vice President Kamala Harris and House Speaker Nancy Pelosi in attendance.
Sarahbeth Maney/The New York Times via AP