Schools suffer despite stimulus funding

The nearly $100 billion for education in the federal stimulus package is helping school districts staunch the bleeding as the recession gashes their operating budgets. But though state and school district leaders from coast to coast say they’re grateful for the additional money, many say it isn’t nearly enough to meet their needs.

In Los Angeles, 2,500 of the city’s teachers and support staff are slated to lose their jobs–even after an infusion of stimulus money has helped save thousands more. In South Carolina, state education officials figure the stimulus will save only 700 of the estimated 2,600 school positions expected to be cut. And in Washington state, officials anticipate teacher layoffs, larger class sizes, and reductions in services, despite the stimulus aid.

This year, 26 states have made cuts to K-12 education and 31 states have made cuts to higher education, according to a report issued in June by the National Association of State Budget Officers (NASBO) and the National Governors Association. For the 2010 fiscal year, 27 states expect to cut their K-12 budgets and 28 states expect to cut higher education spending, the report says.

Without the help of stimulus funds, the budget situation “would have been disastrous for states,” said Brian Sigritz, a staff associate with NASBO. Yet, although the stimulus package is helping, the size of state budget shortfalls keeps growing as well, Sigritz said.

“The stimulus alone isn’t going to be enough” to solve the problem, he said.

For the first quarter of this year, state revenues were down nearly 13 percent, Sigritz explained, adding that states’ income tax collections have declined faster than expected. “The magnitude of the problem is greater than people anticipated” when the stimulus package was drawn up, he said.

There are very few states that aren’t feeling the pinch. With the recent decline in oil prices, even Texas and Alaska–two states that largely have been spared during past recessions–are now hurting. In fact, financial analysis firm Moody’s lists all states as being in a recession except North Dakota. The last recession, after the Sept. 11, 2001 terrorist attacks on the United States, wasn’t nearly as far-reaching, Sigritz said.

When Congress passed the stimulus package, it designated $48 billion for a “State Fiscal Stabilization Fund” intended to offset state budget cuts to education and public safety, while also saving jobs.

States had to apply to receive these funds, pledging that they would spend at least as much on education in 2009 as they did in 2006. States that could not meet this requirement could apply for a waiver, however.

Two-thirds of the money from the stabilization fund was available to states immediately, within two weeks of having their application approved. The remaining one-third is contingent on a follow-up application that states must file this fall, explaining how they have used their first round of funding to enhance education, save jobs, and spur reforms.

As of mid-June, all states had applied for their share of stabilization funding, and 29 states had received a total of $22.4 billion, according to the U.S. Department of Education.

California was the first state to apply, receiving nearly $4 billion in mid-April–with another $2 billion expected this fall. But the state is facing a budget deficit of more than $24 billion, and Gov. Arnold Schwarzenegger has proposed $6 billion in education cuts to help balance the state’s budget.

“The stimulus payments will allow us to offset the significant cuts in revenues” resulting from the state’s budget crisis, said Marc Liebman, superintendent of the Berryessa Union School District in San Jose, Calif. “It is an almost perfect dollar-for-dollar tradeoff.”

But that doesn’t make up for shortfalls in local school budgets resulting from declining property tax revenues, rising energy and health-care costs, shrinking student populations, and other factors, Liebman explained. He added that the state stabilization dollars mean Berryessa “will only [endure] a $3 million cut … instead of a $6 million or $7 million cut.”

Liebman’s district passed a new tax levy and has been able to move around some carryover monies to offset its budget woes, so the district will face “only minor reductions” this fall. However, he said, the stimulus funds “will only come this year and next, and that means we’ll still have overwhelming cuts in 2010-11.”

Indeed, state budgets aren’t likely to rebound anytime soon, Sigritz said, explaining that state revenues typically lag up to two years after a recovery. So even if the economy begins to turn around, states won’t see the effects for a few years, he said.

Besides the stabilization funds, schools also are getting billions of dollars in stimulus money for Title I, special education, educational technology, and other programs in 2009 and 2010. But they also face competing mandates from federal officials: save jobs, while also investing in one-time reforms that can improve education. (See chart in PDF)

In Los Angeles, the city’s board of education voted in April to eliminate or reassign 8,800 positions in the hopes of closing a $596 million budget deficit.

The number of actual layoffs has fallen, thanks to early retirement programs and the use of federal stimulus funds. But as of press time, it still stood at 2,520 positions, including some 2,100 classroom teachers–setting off protests from students, educators, and other stakeholders.

What’s more, because state rules mandate that layoffs be issued based on seniority, some observers fear the cuts will eliminate a young generation of teachers who bring sorely needed enthusiasm and new teaching methods to the city’s most problem-plagued schools–including a willingness to use technology and other fresh approaches to instruction (see related story).

In South Carolina, schools will receive $184 million in stabilization funds–but the money isn’t enough to offset $500 million in budget cuts to education for the fiscal year that starts July 1, said Jim Foster, director of communications for the state’s education department.

Foster said his department surveyed districts and found that, without the stimulus money, they’d have to cut about 2,600 positions. With the money, they’ll still have to cut 1,900 positions, he said–including 1,000 classroom teachers.

“It is a big hit for everyone, even if we do get the money. We have severe deficits in funding,” he said.

Washington’s state legislature in April passed a budget that aims to fill a $9 billion deficit in part by cutting about $1.6 billion from education over the next two years, said Nate Olson, a spokesman for the governor’s office.

The bulk of the cuts come from a statewide initiative that allocated money to reduce class sizes, offer extended learning opportunities, provide early learning programs, and supply professional development. “So the cuts to education will lead to teacher layoffs, larger class sizes, and reduced programs and services, among other things,” Olson said.

Washington received $672 million in stabilization funds and is in line for another $336 million this fall. But “while the funds will help, they will not completely offset the cuts to education,” Olson said.

He concluded: “The [stimulus] money will make a very bad situation only bad.”


National Association of State Budget Officers

NASBO’s “Fiscal Survey of States, Spring 2009” (PDF)

Note to readers:

Don’t forget to visit the Stimulating Achievement resource center. Learn how to make wise spending decisions and keep track of school needs as stimulus funds become available. Go to: Stimulating Achievement

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