The financial fallout from the pandemic has left school districts facing several years of budget shortfalls and tough decisions. State and school leaders everywhere are learning how to do more with less and mitigate harm to their most vulnerable students. The Wallace Blog looked at some of the top priorities and challenges state leaders are facing, lessons learned from the Great Recession and how they are addressing budget shortfalls.
Revenue is down across the country because states are collecting less from taxes on sales and personal income. According to Daniel Thatcher, senior fellow at the National Conference of State Legislatures, states are projecting an 11 to 12 percent decline in revenue, which informs their budget decisions for the upcoming fiscal year.
“Education is not escaping these cuts scot-free,” Thatcher says.
And while school districts across the board are facing cuts, some have more capacity to handle them than others. Even if all districts face the same state budget cuts, Thatcher says, property-wealthy districts could raise revenue on their own to make up for them. Districts that don’t have that capacity would be much more deeply affected by the cuts.
The consequences of these kinds of cuts are not entirely unknown. During the 2008 Great Recession, schools faced similar types of budget cuts, which significantly reduced student ELA and math achievement. These effects were concentrated in school districts serving low income students and students of color. Thatcher hopes states have learned from how cuts were handled during the Great Recession and that they will attempt to lessen negative effects on the most vulnerable students.
Robert Hull, president and CEO of the National Association of State Boards of Education, echoes these concerns, noting that while wealthier communities will see more damage in the next few years as property values shift, the poorest communities are being hit hardest now and need federal investment right away.
“The districts that really need the greatest resources, they’re going to see a greater dearth of resources right now because that money coming from the local level is drying up,” Hull says.
Besides the decrease in state revenue, districts are spending more because of the pandemic. Investment in technology, intensive school building cleaning, personal protective equipment, additional buses to allow for social distancing and professional development for teachers who are learning to teach online are driving up costs for schools, whether they start the year with a hybrid or online model. Additionally, Hull says, schools are continuing to provide meals to families in need, despite depleted nutrition funds.
There is also concern that some students are shifting from public schools to private schools or homeschooling, though it’s unclear how significant those numbers are right now. But fewer enrolled students would mean a decrease in funding for the next school year. Thatcher says it’s fair to say the parents with higher incomes are most likely to shift their children from public school to private schools or homeschooling.
“This is a concern for equity,” he says. “This is a concern for who is going to make it out of this pandemic in better shape than other students. It’s something that states need to be aware of.”
The more-equitable funding allocations that Thatcher would like to see would direct state dollars to low-wealth districts. However, he acknowledges, this is a politically difficult decision to make.
But states like Georgia have put in place systems to do just that. Georgia’s funding formula has a special carve-out of “equalization grants” for low-wealth and rural districts, which suffered the most during the Great Recession. These grants give more money to lower-wealth districts to bring them up to the same levels as the wealthier districts. In Colorado, state funding helps fill in gaps left by local funding from property taxes, to equalize funding across all districts. The recently passed Public School Finance Act created a way for the legislature to put more of the funding burden on local tax revenue, freeing up more state money for lower-income districts.
“One of the other important things that we see states looking at, and that we suggest that states consider looking at, are the supports that help vulnerable students the most,” Thatcher says. Those include afterschool programs, reading supports, coaching and more.
In Utah, the state board has not only avoided school funding cuts—they actually increased education funding. The state board of education and legislative staff put together a document that illustrated education cuts at 2 percent, 5 percent and 10 percent. At 10 percent, Thatcher says, they would be making cuts to things like social emotional learning supports and professional development for teachers. But in August, Utah lawmakers decided to dip into a rainy-day fund and increased funding for K-12 education by 1.3 percent.
Many states had buoyed these sorts of reserve funds after the Great Recession, Thatcher says, lessening the more painful cuts for now because they have more cash on hand than they would have in the past.
“The other policy choice states are looking at is around the funding that comes through their categorical programs and trying to loosen the reins on these,” he says. Giving principals and district leaders more latitude in how they use this money can help them best meet the needs of their communities and schools.
Hull and Thatcher noted the importance of school leaders as the key communicators and decision makers at the school level.
“Leadership matters. Communicate early and often, and be nimble as you’re making decisions,” Hull says of NASBE’s guidance for how to navigate these challenging times. He encourages leaders to be flexible and make changes as they know more, because we are learning more about the virus every day.
Thatcher agrees: “At this time, school leadership is critical. They’re the key communicators to the community, to parents, and they are the ones who should make decisions based upon community input.” He urges parents to communicate with their principals and offer their support when and where they can.
Hull has also called for more research to help state boards of education and other education leaders make informed decisions.
Thatcher’s hope is that the public health and financial crises become an opportunity to shift school funding to more reliable revenue sources, as well as to sources that are more fair to taxpayers and to students. He says: “I’m just hopeful that we can take some good out of all this bad and reform our systems in this unprecedented time.”
