A new report by the National Governor's Association (NGA) and the National Association of State Budget Officers (NASBO) paints a dire picture of the fiscal health of state governments from coast to coast. Ballooning debts made worse by trickling revenues and a stagnant economy could spell trouble for some educational technology programs, as states search for ways to staunch the bleeding.

According to "The Fiscal Survey of States," 37 states cut their 2002 enacted budgets by more than $12.8 billion—and 23 states already have said they plan to reduce net enacted budgets by more than $8.3 billion in 2003.

"The fiscal situation is quite dire. We've had 23 states cutting budgets already this year," said Stacey Mazer, senior staff associate for NASBO. "It looks like it's going to be another tough budget year."

The news doesn't bode well for state education spending. Although lawmakers traditionally have fought hard to avert the budget ax where schools are concerned, experts worry that next year's cuts will affect K-12 programs.

According to the survey, 41 states collected less revenue than expected in 2002, a shortfall that forced state governments to scramble for ways to reduce mounting budget gaps. Researchers said 26 states enacted across-the-board spending cuts, 15 states laid off employees, five used early retirement, 13 reorganized some programs, and 31 used a combination of various other methods.

While some of those moves helped spare education spending in 2002, lawmakers won't have the same options at their disposal as the crisis worsens into next year. Though the laws vary from state to state, it is not unusual for such budget-balancing techniques to be written in as one-time only cuts, the survey said. That means officials next year will be forced to dip their hands into other pots—education not excluded—to make ends meet. So far, just 13 states have granted exemptions to K-12 spending measures in 2003.

For the 37 states with no exemptions from cutting education spending, the outlook is especially bleak: budget cuts in those states are projected to increase in 2003. Minnesota, for example, which has no exemptions, estimates its 2003 budget will be cut by $792.6 million—$660 million more than in 2002. In Oregon, cuts are expected to increase by $319.4 million. And in California—a state saddled with a $24 billion shortfall in 2002—experts expect 2003 cuts will exceed $1.862 billion as its deficit increases.

Despite widespread budget woes, Louisiana received $10 million for its "Technology Improvement Grants" program in 2002, said Sheila Talamo, state director of educational technology. "Our situation, at least in the present, is a little better than what some of my cohorts are looking at," she said.

Still, last year's realities don't mean anything for next year. When faced with an uncertain financial landscape, "everything is in jeopardy," she said. "You have to prove your case each year." Louisiana, which has no exemptions for K-12 education, already has chopped $100 million off its fiscal 2003 budget.