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Budget Battles

States are strapped for cash, forcing superintendents to pare personnel and programs. While making t

Marion Canedo is on the line, wanting to explain her school district's budget cuts, and she will, as soon as she answers the other phone that's ringing in her office. It's an accountant, calling to get figures for that night's school board presentation.

To say that Canedo's job as superintendent of Buffalo Public Schools was hectic, even chaotic, this spring, is an understatement.

Chaos can be expected when a school budget takes a $42.6 million cut. In Buffalo, the cuts meant school closings and teacher layoffs. Canedo has faced the public in a series of open hearings. "They were dramatic, but at least they know we listened," she says. She walked the streets of Buffalo, talking to parents, explaining why their children would be going to different schools next year. "Sometimes I wanted to duck," she admits.

Crunching budget numbers is virtually a silent exercise, done by accountants in back offices with the help of spreadsheets and calculators. Telling the public the story behind the numbers is a much more emotional experience. Parents and teachers get upset when they are told that layoffs are inevitable, or that school programs will have to go.

In many states, superintendents, like Canedo, were under more fire this budget season than they have been in a decade. It is the severity and magnitude of the state budget cuts that have caused distress.

An economic recovery may have officially begun, but the passing recession is still making its presence felt. An estimated 41 states are running in the red, and that bodes ill for K-12 education. On average, one out of every three state budget dollars goes to education spending, says Arturo Perez, a policy specialist on fiscal matters for the National Conference of State Legislatures. That makes it hard to leave education untouched when trying to balance a state budget, no matter what the politicians promise. Currently, legislators in 17 states are cutting K-12 education spending to help make up their shortfalls.

Consider a few scenarios:

How did we get here?

Reality is harsh, especially compared to recent history. The American economy enjoyed its longest uninterrupted period of growth from 1992 until 2001. Such growth allowed state legislators to simultaneously increase education spending and cut taxes. The average, overall per-student spending increased by $1,741, or 31 percent, between 1996 and 2001, according to Education Commission of the States.

Spurring the revenue growth were healthy state income and sales tax totals. That was certainly true for Indiana, which had a $2.1 billion budget surplus two years ago, notes Frank Bush, executive director of the Indiana School Boards Association. Now the state is at least $1 billion in the hole because of decreased tax revenues. A major slide in corporate income tax revenue is a large part of the problem there.

Indiana, as some other states, is mandated to balance its budget. Legislators here had no choice but to cut spending everywhere, including K-12 education. Next year's budget whacks $500 million out of K-12 education spending, with education technology as the sector hardest hit. "Our technology money has been cut 100 percent," says Suellen Reed, Indiana's superintendent of public instruction. A planned $40 million to upgrade equipment-that in some schools is now five years old-and train staff and students is gone.

Oregon was flush with cash, having enjoyed 10 years of budget surpluses. All taxes were lowered, spurring corporate growth and real estate sales. "Now the recession hits and there is no slack in the system," laments Portland's acting superintendent, James Scherzinger, and long-time business executive in the district.

"This is the worst financial situation since the 1990-91 recession," adds Perez of the National Conference of State Legislatures. State budget cuts threaten to reduce state K-12 funding by $10 billion nationwide, notes the Public Education Network, a non-profit watchdog group. The only good news is the knowledge that this downturn will end. Perez observes, though, that response to the recent downturn was different than the response a decade ago.

This time around, state legislators have been afraid to raise income and sales taxes, he says. In 1991, states' collectively raised $15.4 billion in new taxes, based on a mix of increases in personal, corporate and excise taxes. This year, the only significant tax increases have been "sin taxes," -levies on cigarettes and alcohol, notes Perez.

'No good choices'

State budget shortfalls leave superintendents with "no good choices," as one official observes. Who wants to pick between staff cuts, lost programs or closed schools?

For Canedo, budget woes are responsible for 312 layoffs. She has tried to contain them to administrative and clerical staff, but 185 Buffalo teachers are now unemployed. Determined to keep class sizes the same, Canedo has insisted that all administrative staffers who had been promoted out of the classroom and into other service jobs, go back to teaching. Granted the Buffalo schools are doing without many technology coordinators and curriculum specialists, but some jobs have been saved.

She has had to close five schools and increase the student bodies at several other schools. This could not be avoided, she notes.

It wasn't easy squeezing $42.6 million out of the upcoming school year budget, notes Canedo. But her staff had practice. Just last fall they suffered through an $28 million shortfall. All through the fall, New York state was operating without an official budget. The political situation was confusing enough, but was made much, much worse with the attacks on the World Trade Center on Sept. 11. Budget debates became complicated beyond measure. The state was then in a fiscal crisis, leaving areas like Buffalo without definitive answers on spending.

"We met every day after 9/11," says Canedo of herself and staff. In a dogged attempt to get money to pay the bills and save teachers' jobs, she and her staffers poured over every grant that had been written for the school district. In all, 130 federal, state and private agencies were asked if money earmarked for certain initiatives could be used instead for general and other expenses. In many cases, Canedo received the OK to use funds as she needed to, a turn of events that eased a difficult situation.

On the other side of the country, in Portland, Ore., Scherzinger has had his own experience in downsizing and budget cutting. This spring he learned that his district, which serves 54,000 students, would have to make do with 10 percent less. A total of $36 million would be cut from the budget.

He's concentrated the cuts in five major areas:

Absorbing the cuts won't be easy, he says, referring especially to the health-care cost savings. For the first time, he will ask that employees pay part of the health-care premium. The district currently pays $700 per employee, per month, for health care coverage. The district will cap that at $600, leaving employees to pay $100 per month. This cost-savings measure was not finalized at press time and Scherzinger anticipated some flak from employees, although the district will save at least $4 million per year in health-care benefits covered for 3,500 teachers. "I am expecting this to be difficult." His other budget options aren't any easier. "I've called these cuts 'mission threatening,' " he says.

Portland will close two schools, cut the school year by eight to nine days, and raise the teacher/student ratio to 30:1. Approximately 15 percent of the teaching staff may be laid off.

Programs will be cut by $5.5 million; the district is eliminating a horticulture education program for students. "This was a professional, technical program," Scherzinger explains, adding that horticulture is a big industry in Oregon.

A new reliance on contracted custodial workers, instead of district employees, will cut these costs from $17 million to $4.5 million. Of course, a less-expensive contract service will mean more layoffs.

Adding to Scherzinger's frustration is the harsh fact that his now $325 million budget is only $15 million higher than his budget in 1990. Budget growth hasn't even kept up with inflation, even though the district is serving the same number of students, and is striving for higher achievement.

For now there is no reprieve to the budget trouble. The Federal government, which accounts for 7 percent of overall K-12 education spending, is not expected to dramatically increase K-12 education totals to make up for any state shortfalls. President Bush's proposed K-12 budget for 2003 is $56.5 billion, only 2.8 percent higher than the 2002 budget.

"We have to hunker down," says Vance Ramage, superintendent of schools in Paducah, Ky., who's exercising a number of cost-cutting measures in his district. Some teacher jobs will be lost, some supply orders will be ignored, district travel has been cut, and even some thermostats will be lowered to save on energy costs. He's holding off on buying any new computer equipment for his schools this year. "Still, I'm optimistic," he says. His secret? "I maintain a cadre of people around me who can create miracles," he says, referring to teachers and administrators who are willing to do more with less. Miracles have their limits, though, he adds. Ramage can foresee managing in this mode for a year, maybe two. "After that, you start to hurt."

Jean Marie Angelo,, is senior editor.