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Budgets Pose Multiple-Choice Dilemma for Administrators

School Administrators Center

Seems every time superintendents and principals think they have cut the last item they could possibly cut from their budgets, more bad news comes along. Unfortunately, the economic forecasts for next year are not much brighter, and most schools will have to live through another year of sacrificing staff, programs, and purchases they really cannot afford to sacrifice. Included: How are some districts are handling budget cuts?

The budget decisions facing many principals this year are like choosing between losing an arm or losing a leg. Losing either will cripple the whole.

With the economy going from slow to stagnant over the past 18 months, most states' revenues have not come close to meeting projections. Money trickling, rather than pouring, into state coffers means there is little available to flow out to school districts. And as school systems have seen their rainy day reserves evaporate, more principals are looking for more and deeper budget cuts to meet an ever-shifting bottom line.

Equipment, after-school programs, new initiatives, and professional development courses were red-lined early in the deliberations; now, many principals are scrutinizing the core of their instructional programs. Teachers also are sacrificing; Portland, Oregon, teachers agreed in March to a pay cut for the rest of the school year, to prevent the school year from ending early. Other districts and states are considering instituting four-day weeks, renting out buildings, and levying emergency taxes to save and generate money.

"The problem is, we are looking at another down economic year, and there are no rainy day funds," said Michael Griffith, a policy analyst with the Education Commission of the States (ECS). "Districts have exhausted other revenue sources. Most districts had built in rainy day funds -- but the recession has gone on longer than anticipated."

Rising unemployment rates, minimal job growth, stagnating salaries, and declines in income and sales tax revenues have hit most states hard. Overall, the 50 states were short $40 billion in revenue for education going into this budget year, Griffith added. "The feeling [at the states' levels] is if they don't cut education, they will have to gut other programs."

"State revenues are not what was anticipated, so if the money isn't coming in, they can't distribute it to school districts," said Judith Seltz, a spokeswoman for the American Association of School Administrators (AASA). "This is as bad as we've seen it in a decade."

When There is Nothing Left to Cut

Michael Griffith, a policy analyst with the Education Commission of the States (ECS), offers a few tips for those administrators still poring over their budgets:

  • Go over budgets meticulously, even if you feel like you've already done that.
  • Look at the possibility of holding programs or bidding for items with other districts.
  • Cut everything else possible so you don't have to layoff teachers. "When you cut young teachers, they often leave the profession," according to Griffith.

    That means for now, Iowa is not piloting a performance pay system for teachers and California is dropping its bonus pay program, Griffith told Education World. Florida, which is bound by law to reduce class sizes, must choose between compliance and dismantling other state and educational programs. "They barely have enough money to do what they are doing now," Griffith said of Florida.

    Boston, Massachusetts, school officials were told to cut the school budget by 10 percent for next year. Every principal in the city, in turn, must cut his or her budget by 10 percent.

    Even more unusual and stressful is that revenue shortfalls this year are forcing some districts to make mid-year cuts, after already hacking down their spending plans in the fall.

    "In some cases, states are doing the second round of cuts," Griffith said. "And when you cut this late, there is not much left to cut. Eighty percent of school expenditures are salaries -- so most of the cuts we are seeing now are teachers. Most districts are looking at more cuts this year and scaled back budgets next year."


    Oregon is one of the states hardest hit by the recession, and Portland is one of the most battered cities. Only a last-minute offer by the Portland Association of Teachers to take a 5 percent pay cut, the equivalent of working ten days for no pay, helped prevent the district from ending school 25 days early. Efforts by state and local legislators made up the rest of the shortfall for this year.

    "It's quite a sacrifice," said Ann Nice, president of the Portland Association of Teachers. "Teachers felt good about helping save the school year for the kids. It's about a $10 million gift from some pretty low-paid teachers."

    The cut will mean a $1,512 loss over the next five months for beginning teachers, who make about $28,725, and a $2,784 loss for a teacher who makes $50,000.

    Teachers had been ready to strike March 10, because union members could not support the board's final contract offer, according to Nice. The board had proposed that teachers take a 24-day pay cut, contribute to their health insurance premiums, and accept a pay freeze. By offering a pay cut, the teachers also were able to avoid paying for their health insurance.

    A county referendum is planned in May to raise more revenue. The district is predicting a $58 million shortfall in the fall, said Nice, so layoffs still are possible.


    Districts in California also are looking ahead to another drastically austere year; the Association of California School Administrators has advised its members to draft "doomsday budgets" for next year, ones that take into account the worst possible scenarios, said Brett McFadden, an ASCSA spokesman. This includes planning for across the board layoffs, significant program cutbacks, and the rollback of reform programs, such as class-size reductions.

    As many as 15,000 teachers could receive layoff notices. "We've already had noticeable layoffs among classified staff and support people," McFadden said. "We already have had 18 months of budget cuts; no one has heard of anything like this in 50 years."

    California's heavy reliance on personal income tax revenue, which has plummeted over the past few years, has meant cuts all over the state. About 25 percent of state revenue comes from stock options and capital gains. Forty-five percent of all income generated is from the top 5 percent of income earners, added McFadden.

    "When the very rich caught a cold, the rest of the state got the flu, and it could go to pneumonia," he said. The current funding structure is outdated, McFadden added. "We have no clear indication from state leaders that education is a priority."


    For the short term, some districts are turning to other resources -- like the business community -- or appealing to voters to help them get by. Advertising space could be for sale on some California school buses, said Griffith.

    Voters in the Mountain View-Whisman School District in Mountain View, California, will go to the polls June 3 to vote on a new five-year tax of 5 cents per square foot of assessed property value, a levy called a parcel tax. The measure is expected to generate $2.4 million a year for the next five years; parcel tax money can be used for educational programs, said superintendent Jim Negri.

    If the measure fails, plans call for eliminating

    • art and music programs offered jointly with a community organization;
    • a counseling program done with a local agency;
    • fourth and fifth grade physical education;
    • library secretaries;
    • health and attendance office clerks;
    • middle school athletic programs;
    • 35 first year probationary teachers; and
    • another $150,000 at the district level.

    "What we need is stable, long-term, reasonable funding from the state," Negri told Education World. "This is probably the worst case I've ever seen."

    The Shoreline School District, in Shoreline, Washington, is raising revenue by leasing a vacant elementary school to a private school. That agreement is expected to yield about $125,000 this year, district spokeswoman Marjorie Ledell said. "This is the first time the school district has leased a building to an outside organization," Ledell said. "The superintendent feels like we have a stewardship responsibility; if we have a building, we should use it."

    While most administrators are focused now on getting through the next budget year, several agreed that the nation's schools need a less volatile funding source. "We need a more comprehensive approach," said McFadden of the ASCSA. "We need to employ long-term strategies, targeted cuts, tax increases, and structural reforms."