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 24 states already have said they plan to reduce net enacted budgets by more than $18.5 billion in 2003.

“The fiscal situation is quite dire,” 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 14 states have granted exemptions to K-12 spending measures in 2003.

Of the 36 states with no exemptions from cutting education spending, the outlook is especially bleak in those states where budget cuts 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. And in California—a state saddled with a $24 billion shortfall in 2002—Gov. Gray Davis has proposed a massive $10.2 billion in cuts this year to help fill the gap.

“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 event, held Dec. 1-2, 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 tough 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 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 their efforts to hold on to education dollars next year, finding ways to funnel old money through new channels simply won’t be enough for many states.

States and school districts will need to prioritize their spending, Hunt said. This need 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 budgets.

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.”


National Governors Association

National Association of State Budget Officers