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Education Dive
Pandemic could lead to 'major upheaval' in school district budgets
Protecting reserves and avoiding promotions are two steps leaders can take to prepare for a drop in revenue, experts say.
Linda Jacobson
March 25, 2020
It took 10 years for some states to recover from the Great Recession —
and to see surpluses they could use to increase funding for K-12
education.
How they weather the “economic shock” brought on by the novel
coronavirus will depend on several factors, including the duration of
the pandemic, the size of their rainy day funds, and whether they act
quickly to keep budgets balanced by increasing revenue or making cuts,
said Barb Rosewicz, a project director focusing on states’ fiscal
health at the Pew Charitable Trusts.
“We’re just coming off of a couple of years where states were seeing
some budget surpluses,” she said. “States were beginning to make
headway, particularly in K-12.”
According to Marguerite Roza, director of the Edunomics Lab at
Georgetown University in Washington,D.C., districts won’t see the
immediate effects of a recession. In fact, because of the closures,
some are now "underspending" in areas such as professional development,
substitute teachers, events and utilities.
But as sales tax revenues drop, district finances could be in for a
“major upheaval” in the 2020-21 school year. Districts in states where
a greater portion of funding comes from the state level will also feel
deeper effects than those that rely more heavily on property taxes.
In addition, higher-poverty districts tend to rely more on state
funding, and therefore take a greater hit during a recession. In a
webinar Tuesday, Roza suggested districts in cities with large tourism
and event industries — such as Las Vegas and Orlando — could be the
most adversely affected because of all the cancellations.
"More students will be living in poverty with greater needs," she said,
adding a parent's job loss also increases student mobility and
absenteeism.
But she also suggested district leaders shouldn't panic if there isn't
a lot of funding for K-12 schools in an initial federal stimulus
packages. "We do have some time," she said.
Some states already revising K-12 spending
While K-12 tends to not be the first area where state policymakers cut
spending, Rosewicz said, she added because it’s the largest part of
states’ budgets, it will be affected.
In Tennessee, for example, Gov. Bill Lee has released a revised budget
proposal that trims back what teachers were expecting in raises and
drops other major education initiatives, such as mental health services
for students and improvements in literacy instruction.
Policymakers in Louisiana are also expecting they’ll have to scale back
proposed spending in areas such as teacher salaries and early-childhood
education.
And Maryland Gov. Larry Hogan has already asked the legislature for
access to the state’s reserve funds to keep small businesses afloat.
The outbreak has also worsened in the state just as the legislature
approved a broad new school reform plan expected to cost billions.
Lawmakers made adjustments in the bill related to per-pupil spending
should revenues come in less than expected.
"Talk about a u-turn," Roza said, adding just two months ago, governors
were announcing large education initiatives in their State of the State
addresses. "We blinked and all those things are gone."
Bottom of Form
A report released last week from the Center on Budget and Policy
Priorities noted states with sizable reserve funds are in a better
position to ride out another recession. But it also used North Carolina
— where teachers have threatened to strike in recent months over pay —
as an example of where those reserves have not been directed toward
education.
“While North Carolina’s reserves may be nearly adequate to avoid
substantial additional cuts if the looming recession is moderate, the
cuts already imposed have weakened its future economic vitality,” the
authors wrote. “And if the recession is more severe, North Carolina may
impose additional cuts on a school system that already is badly
underfunded.”
What district leaders can do now
Stop spending, Roza said, urging superintendents to protect what
reserves they have, institute hiring freezes, and avoid promoting
teachers and administrators to higher positions. She also stressed the
importance of frequent communication with the community and said
principals are the "golden ticket" to remaining transparent with
families and employees about the tough decisions districts might need
to make.
In a recession, she said, district costs often increase because veteran
teachers — with higher salaries — hold on to their jobs. Layoffs are
more likely to affect novice teachers, who earn less money. She also
recommended districts not make across-the-board staffing cuts and allow
school leaders to make decisions about whether to fill empty positions.
States, she said, could allow districts to reopen union contracts to
address issues such as raises and pension liabilities in future years.
But she added in many states, teachers "waited a long time for these
raises" and won't be willing to renegotiate them.
K-12 might also end up competing with higher education for state funds
because policymakers tend to prioritize workforce training as part of
recovery efforts, Roza said.
Regardless of whether schools reopen this semester, some large
districts, including Chicago Public Schools, are already asking for
help covering the costs associated with the closures.
District leaders are facing “the largest adaptive challenge for large
urban public education systems in a generation,” Los Angeles Unified
School District Superintendent Austin Beutner and San Diego Unified
School District Superintendent Cindy Marten said in a joint statement,
calling on state lawmakers to approve emergency funding to help the
state’s two largest districts shift to the “new constraints of a
distance learning model.”
More than 40,000 educators in both districts, the mayors said, need
training to provide online instruction to students with a range of
needs, including English learners, gifted and special education
students, and those who are homeless.
“Pick your metaphor,” they said. “This is the moon shot, the Manhattan
Project, the Normandy landing, and the Marshall Plan, and the clock is
ticking.”
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