Education Funding

Texas Schools Face Deep Cuts Amid Budget Crunch

By Sean Cavanagh — February 08, 2011 6 min read
Rep. Jim Pitts, the chairman of the Texas House appropriations committee, answers questions about the proposed budget. Texas faces a projected shortfall of $15 billion to $27 billion.
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Texas is famous for its oversize economic booms and busts, but its schools are bracing for a potentially dramatic bust of their own as state lawmakers consider budget cuts for the coming year that some fear will result in thousands of job losses and the elimination of programs serving students of all ages.

State officials, facing a two-year budget shortfall of anywhere between $15 billion and $27 billion, have proposed deep reductions in school spending, including providing less than is required by the state’s school-funding formula.

The budget predicament would seem to leave the state with a number of options for closing the projected shortfall, most of them unpleasant. Lawmakers could make deep spending cuts. They could dig into a $9.4 billion rainy-day reserve fund, or increase state fees. Or they could raise taxes, though Republican Gov. Rick Perry, who was re-elected last fall, and GOP leaders in the legislature have vowed not to do so.

“It’s kind of hard to quantify where it would hurt most, because there are cuts everywhere,” said Jenny LaCoste-Caputo, a spokeswoman for the Texas Association of School Administrators. Over the past few years, the state’s schools “have been cutting,” she said. “They’ve done it, and tried not to affect what goes on in the classroom. There’s no fat left.”

A Starting Point

In a pair of proposals released last month that will serve as a working template for budget planning and negotiations, lawmakers in the Texas House and Senate called for deep cuts in K-12 programs over the next two years. The state operates under a biennial budget, and its state constitution requires the budget to be balanced.

The House plan calls for reducing total state spending from $187.5 billion to $156.4 billion during that period, about a 17 percent drop. The state’s foundation spending on school districts would fall from about $37 billion to roughly $32.8 billion, but spending on education would also be about $9.8 billion less over two years than what is called for through the state’s school-funding formula. While a Senate plan offers schools a bit more money, education advocates say either version would bring significant pain.

Lynn Moak, a partner with the consulting firm Moak, Casey, and Associates, who has analyzed state education for years, said the scale of the proposed cuts, as a legislative starting point, is probably unprecedented. Texas school systems would be forced to cut between 80,000 and 100,000 jobs if the spending cuts took effect, estimates Mr. Moak, whose Austin, Texas-based company consults school districts on financial issues.

Texas lawmakers, who meet every other year in regular sessions, have emphasized that the initial budget proposals are only the beginning of a process that will consume lawmakers’ attention for months.

Republicans, who control both chambers of the legislature, pledge to look at a number of options to close the budget gap over the course of the session, scheduled to run through the end of May. In a recent speech on the floor of the state Senate, the chairman of that chamber’s finance committee, Steve Ogden, called on lawmakers to address “serious structural problems” in school funding, which he said continually leaves the state short of revenue.

“It will not be easy, it will not be painless, but we can get the job done,” said Sen. Ogden, adding: “In order to balance this budget, we’re going to have to fix public school finance.”

In a statement, Texas Speaker of the House Joe Straus, a Republican, said he was “confident we will protect direct services for students in the classroom, as we work to fulfill our constitutional duty to balance the budget this biennium.”

Job Losses Coming?

As currently written, the House budget would eliminate or scale back programs in areas such as technology, prekindergarten, science laboratories, efforts to promote high school completion, financial aid for college, and merit pay for teachers.

But the most severe cuts to schools are likely to come in layoffs of teachers, administrators, and other personnel, said Dominic Giarratani, an assistant director for governmental relations at the Texas Association of School Boards. About 80 percent of districts’ budgets are consumed by personnel costs, he noted, and if the state gives districts $9.8 billion less than they need over two years, they will have no choice but to cut jobs.

“Almost uniformly, [school officials] are saying it’s going to have a devastating impact,” Mr. Giarratani said. “Schools can’t set the price of gas, and they can’t set utility costs. The thing they can control is personnel.”

Texas faces a budget gap of at least $15 billion over the next two years, a shortfall that is partly the result of losses in tax revenues stemming from the force of the recent economic downturn. But some budget analysts project a shortfall of about $27 billion once factors such as growth in student enrollment and other projected costs are taken into account.

Gov. Perry has long touted his record of fiscal conservatism, arguing that his commitment to low taxes and lean regulations has allowed Texas, the nation’s second most populous state, to emerge from the recent recession in stronger shape and with a lower unemployment rate than many states. During the election campaign last fall, Mr. Perry’s opponent, Democrat Bill White, pointed to the state’s anticipated budget shortfall to question the governor’s record of fiscal restraint. But voters sided with Gov. Perry in that race, electing him to a third term in office.

Facing the Cliff

While he has criticizes federal economic-stimulus spending, Mr. Perry’s state has accepted billions of dollars in that emergency aid, including money for schools. And like many states, Texas is now bracing for the loss of stimulus funds. During the next budget cycle, Texas must make do without $3.3 billion in stimulus aid for the school district funding formula, according to the House proposal.

While school advocates hope lawmakers will fight to protect education funding, the Texas Conservative Coalition Research Institute, a policy group that advocates for limited government, said the state can cut money that doesn’t flow to the classroom.

Some parts of district spending,such as administrative costs, are “unsustainable fiscally [and] unacceptable as a matter of policy,” said Brent Connett, the task force director for the group. “Our public school system is plagued by inefficiency.”

Variations on Texas’ budget woes are playing out across the country. State tax collections, adjusted for inflation, are in aggregate 12 percent below pre-recession levels nationally, and 2012 could be states’ worst budget year on record, according to the Center on Budget and Policy Priorities, a Washington-based research organization. Forty-four states are projecting budget shortfalls in 2012.

At several points in its recent history, Texas’ economy has swung between periods of breakneck growth and brutal down turns. The state suffered a severe blow in the mid-1980s when the price of oil fell, and setbacks to the computer and information technology industries during the “tech bubble,” at the turn of the 21st century, brought widespread job losses.

But many longtime school advocates say budget conditions today pose a far greater threat to education than those economic downturns did. The spending proposals offer districts no choice but to cut jobs and programs, said Eva DeLuna Castro, budget analyst for the Center for Public Policy Priorities, an Austin-based organization that advocates for low- and moderate-income Texans.

Past crises, she said, were “like a stubbed toe compared to what’s happening now.”

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A version of this article appeared in the February 09, 2011 edition of Education Week as Texas Schools Fear Deep Cuts in State Budget

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