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.

“This is going to be a hard time for America’s schools, especially as we try to leave no child behind,” said former North Carolina Gov. James Hunt, who heads up the James B. Hunt, Jr., Institute for Education Leadership and Policy.

Hunt and a number of governors nationwide addressed the challenge of funding education in the face of state budget deficits during a recent symposium titled “Public Education in Your State: Setting the Agenda and Staying the Course.” During the Dec. 2 event, Hunt said state leaders—including 20 governors and governors-elect—discussed ways citizens and government officials could work to keep America bullish on education, even during what he acknowledged are uncertain fiscal times.

“The economic crisis in most states is really severe. It’s a much bigger crisis than in Washington,” Hunt said. “But we need to protect the classroom.”

One way state leadership can ensure that protection is to create additional revenue streams for state governments, Hunt suggested. While some states, including Maryland, are pondering gambling, others are hiking taxes on cigarettes and alcohol. “They need to search for ways across the board,” he said. “It’s tough work.”

Another option is to stream education dollars from existing revenue sources that previously had been used to fund other programs.

In Michigan, for instance, education spending increased in 2002 despite $385 million in cuts to the enacted budget. According to Matt Resch, a spokesman for the governor’s office, spending remains buoyant because the state draws its school aid funding from sales tax revenue, including cigarette and alcohol taxes, which are resistant to economic lulls. Previously, that money came from property tax income, which traditionally has faltered in the face of recession.

“We are one of a handful of states that have been able to increase education spending during this recession,” Resch said.

In Illinois, officials have taken another tack. According to Richard Dehart, acting division administrator for eLearning, the state decided to split funds for its $25 million “Closing the Gap” program, which gives schools money for individual technology initiatives, over two years. That means schools that did not receive funding last year will get the money for their projects in the upcoming school year, he said.

“Some schools have had to wait,” he said. “But economically, I think it’s in everyone’s best interests.”

Regardless of efforts states make to hold on to education dollars next year, cuts eventually become imminent in a turbulent economic climate. Finding ways to funnel old money through new channels simply won’t be enough for many states.

“Schools [will] need to prioritize” their spending, Hunt said. For example, even in the face of financial shortfalls, it is critical that school systems continue to hire and retain high-quality teachers, he said.

The need to prioritize spending has educational technology advocates worried that technology—which is seen by some as a nice frill but not a necessity—will be one of the first line items cut from school budgets.

Governors at the Dec. 2 symposium also expressed their desire for the federal government to step in and provide additional fiscal relief.

“The federal government ought to do more,” Hunt said.

According to him, governors nationwide are worried that a number of the sweeping changes brought about by the No Child Left Behind Act will result in unfunded mandates, or empty promises, that neither the federal government nor individual states will have the financial wherewithal to fulfill.

One way the federal government could help ease the onus placed on states is to provide more money for school construction efforts, Hunt said. According to him, almost every state has an imperative need for new facilities and long-overdue infrastructure renovations.

“This is as great a priority and threat to America as homeland security,” Hunt warned. “The federal government is going to have to become a bigger partner with states and local governments. We’re all going to have to come together and do this job for our children.”

Links:

National Governors Association
http://www.nga.org/

National Association of State Budget Officers
http://www.nasbo.org/