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A Perfect Storm: Annual School Spending Report

With a faltering economy, K12 districts find creative ways to cut and stretch their budget dollars.


If it wasn't the worst budget cycle in decades, it was one of the worst for school district administrators trying to juggle union-negotiated salary increases, higher fuel and food prices, and federal mandates with less money, district leaders and education experts say.

While most districts have increased budgets for the 2008- 2009 school year over last year, the increases do not meet the higher costs of fuel, insurance and food, according to the American Association of School Administrators’ public policy department members. Few districts will see decreased budgets this year, below the 2007-2008 school year, but if the budget includes fewer funds from the state or local sources, districts still have to make cuts. And if fuel and food costs are higher than budgeted, they have to make more cuts. Some districts such as Miami-Dade County Public Schools and Detroit Public Schools are dealing with outright decreases in their school budgets over last year.

It’s a perfect storm of conditions for districts in part because of the collapse of homeowners’ loans and the nation’s mortgage fiasco, which lower local property revenues that help fund school district budgets; state money reductions in part due to lower sales tax revenue because consumer spending is low; and districts’ own rising costs for fuel and food, according to Daniel Domenech, AASA executive director. On top of that, student enrollment nationwide should hit its highest peak this year, with about 50 million public school students. Some large, urban districts are seeing reduced enrollments, but those districts must compensate for receiving a reduction in state funds because of the lower enrollment.

A recent survey by the National School Boards Association (NSBA) found that 35 percent of school districts across the county this past spring and summer were making “substantial” cuts in their budgets: Onequarter of those districts reduced spending on instruction, while another 30 percent were planning “minor” cuts.

Reginald Weaver, former president of the National Education Association, says 10 states have announced cuts in K12 funding, while another 16 are cutting funds for higher education. As of July 1, Weaver says, 29 states were facing budget shortfalls. “Put that all together,” he says, “and that’s about $48 billion” in the red, he says.

Time for Strategy

In times like these, says NSBA Executive Director Anne Bryant, it’s essential for school districts to have a clear-eyed vision for the future. “Without a strategic plan, it’s very hard to make the right cuts,” Bryant says. “Often the easiest thing to cut is professional development. In the short term it sounds easy. In the long term it could be devastating.”

Districts face various options: cutting teachers and staff , which provides the biggest bulk of a budget, at a time when the country needs more teachers for rising student enrollment, says Domenech, a former 30-year superintendent. Increasing class size might be one way to accommodate higher student enrollment. Domenech foresees more noncore classes being chopped, such as elective high school courses or foreign languages, like Arabic, which only attracts a handful of students, or even less popular Advanced Placement courses. He also foresees cuts in additional services that schools might offer students in need of extra help. Some district leaders say they have or are raising the price of school meals, by about 25 to 50 cents, to help make up for losses.

At the same time, Domenech says academics and classroom instruction is a sacred cow that should not be touched. “You will do everything you can to protect students in the classroom and classroom instruction,” Domenech says. “Postpone construction work or renovation work that is not a safety issue. Postpone purchase of computers.”

Domenech recalls the energy crisis of the 1970s—which inspired some costsaving initiatives, such as the midwinter recess, that many districts maintain today. Many rural districts, for example, depend more on state money if they have a small local tax base, according to Rachel Tompkins, president of the Rural School and Community Trust. “So as state budgets get tighter, that begins to squeeze out what local districts get,” she said in July. “And one of the things we’re hearing, particularly in the Midwest,” where students have long bus rides to and from school, is that “more of them are thinking about four-day weeks for school.”

“Sometimes necessity is the mother of invention,” Domenech adds. “This may be an opportunity to do some very creative things that in the long run might end up mproving education and instruction.”

Bryant says the NSBA has a policy on he importance of art and music—often two of the first instructional areas to be slashed. She advises districts to consider sking their communities to finance activities now funded by the general und. Domenech adds that the community needs to stand up and start taking on more work. For example, more parents could volunteer and/or tutor students, or ore businesses could donate time or services. For example, football is highly popular in many Texas communities, Bryant says. “Go to the community and ask for outside funding for football.”

Real Troubles

For San Diego Unified School District, the district saw the “largest single budget cut in history,” with $53.1 million in cuts for the 2008-2009 year, according to Superintendent Terry Grier. The general operating budget is $1.27 billion for the 2008-2009 year.

The district is currently being audited, and Grier and his staff are reviewing the district’s entire operations to see “what we’re doing and how we’re doing it.”

Utilities in the district increased by about 12 percent, or $2.2 million, and health and benefi ts costs increased by about 7.6 percent, or $10.6 million, over last year, according to James Masias, the district’s CFO.

Miami-Dade County Public Schools, which recently nearly had its superintendent, Rudy Crew, fired by the board of education, has also had its budget slashed by $200 million, to below the 2006-2007 general fund budget. The 2008-2009 general fund budget is $2.93 billion.

The reduced budget is due to higher operating costs and lower state revenues by $82 million, as student enrollment, which is now 341,425, declines in the district that was a Broad Prize for Urban Development finalist for three years. “Our intent has been to avoid touching specific educational programs, and every effort has been made to spare classrooms as much as possible,” says Ofelia San Pedro, the district’s deputy superintendent of business operations. “However, the reality was all options had to remain on the table and it was necessary to make small cuts” to school programs, she says.

Employee benefits and health insurance increased by $39 million, while food prices increased by $4 million. Fuel prices went up by $4 million more over last year, and electricity rates increased by $12 million.

Like Miami-Dade, Detroit Public Schools has seen student enrollment plunge. Over the past eight years it has lost 60,000 students (101,000 students are enrolled now), and state funding has spiraled downward, according to Steve Wasko, a district spokesman. The DPS general operating budget sank from $764.9 million in 2007-2008 to $682.9 million for 2008-2009.


Administrators in Miami-Dade took a pay cut in a sense that they can take days off but without pay, according to San Pedro. The district is also waiting until this month to consider $72 million in salary increases for teachers and staff members, which were given under multiyear contracts. “The district has not been able to budget for teacher salary increases,” San Pedro says.

The reason for this is that Florida Gov. Charlie Crist has announced potentially holding back $43 million for Miami-Dade schools due to the failing state economy. “We are awaiting the outcome of the governor’s holdback to determine if the district will be able to make additional cuts to fund teacher salaries,” she says.

About 844 of 1,270 teachers have been reassigned in other schools with vacancies due to retirement and leaves. The district is still looking to place the other teachers in positions that are needed, San Pedro says. Some of them have been relocated to other schools or programs to accommodate shifting student enrollment, program changes or eliminations. And the school board approved reducing the teacher force by 154 positions and eliminating 318 central office positions.

Media specialists have been reduced so that one or two are in every school, San Pedro says. And custodians are taking on more cleaning space—23,000 square feet as opposed to 19,000 square feet, which was the typical size—so more custodians can be shifted to 13 new schools in the 340-school district. The new schools are to answer the state’s mandate to reduce class sizes to 25 students or fewer in high school, 22 students or fewer in middle school, and 18 students or fewer in elementary school. This year, districts need to meet such class sizes on average in an entire school building, but eventually every classroom will have to meet those numbers, San Pedro says.

She adds that the district’s six regions were reduced to four, meaning that fewer administrators are now needed to oversee and administer operations.

The district is also reducing the number of programs offered to students in magnet schools (a $9 million cut in funding) and cutting gifted and secondary reform programs by $22.3 million. For example, if a child is going to a magnet school for arts, the program might not be available this year and the student might have to go without or try to find another program within the district, San Pedro says.

School Improvement Zones, which were created in 2005 for low-performing schools with extended years and days and extensive professional development, have been eliminated, as have all nonmandatory summer school programs, resulting in a savings of $10 million. Alternative education was cut by $5 million.

In San Diego, teachers and principals did see a 4.25 percent increase in salary, while most other staff received 3 percent increases. And after initial deep cuts to teaching staff last spring, about 200 teachers without tenure, or probationary teachers, have been cut out of a total of about 8,000 teachers. In addition, 198 central office positions have been slashed, which “if we got all the money in the world I wouldn’t replace,” Grier says. “I thought in many years we were top heavy.”

Grier also eliminated special education administrators at each of the high schools, who in part managed Individual Education Plans, so principals and vice principals have to pick up the slack. Struggling students who might have benefited from summer school this past season could not get the services, says Debbie Foster, a district project supervisor.

The Detroit district, which has been embroiled in an FBI investigation over alleged misuse of funds in a 2007 program to attract and retain students, not only had to wrestle with cuts and devise smart ways to save but also had to answer a peer review by the Council of the Great City Schools, which found that the district’s “absence of systems and processes allow for inefficiencies,” Wasko says. The recent report also found “pockets of competence” in the district, he adds.

While student enrollment was declining, there was no corresponding reduction in the number of teachers and staff members under the former superintendent, Wasko says. Now the district, under Superintendent Connie Calloway, is forced to slash positions. “We really have to adjust the budget in the course of one or two years for events and circumstances that occurred over four and five years,” Wasko says.

About 900 noninstructional positions and 818 teacher positions were eliminated, he says. The central office even lost 142 vacant positions.

Detroit Public Schools asked that union and nonunion salary increases, already negotiated in 2006, be frozen or lowered, which would save $70 million in increases, Wasko says. That was still under discussion as of late July, and there was no timetable on when it would be resolved.

Wasko explains that as a further costcutting measure, some high school and middle school students will use city buses, not the yellow school buses they have ridden and that elementary students will still use. Th is move should save the district $27 million over the next two years.

Reforms Still Underway

Despite no program increases, the Detroit Board of Education has moved forward in a major school reform initiative, which means realigning and redesigning some of the 27 high schools in the district, Wasko says. This year, the district is planning the redesigns of five low-performing schools, which will be converted into smaller learning communities. The district is receiving a grant from the Skillman Foundation, a local organization, to help fund it.

The San Diego district is converting one of 40 elementary schools, which have only about 100 students in each, into a Music Strings School this year, for students in pre-kindergarten through first grade. Students can play, for example, violin and perform in a small performing arts theater.

The district plans to establish a citizens advisory committee to review potential closures or redesign of other small elementary schools. One idea is to close a small school and redesign it as a small high school with a vocational theme. Seniors would take half of their courses at the school and then take the other half at a community college. The district is also implementing “attendance incentives” to get more students to show up to school and graduate. A 1 percent improvement in districtwide attendance will add $6 million in state funds to the budget, Grier says. Students with weekly perfect attendance will be eligible to win prizes, such as iPods or gas cards.

"We really have to adjust the budget in the course of one or two years for events and circumstances that occurred over four and five years." -Steve Wasko, spokesman, Detroit Public Schools

A new graduation coach will also be in each high school to help steer at-risk students toward success, Grier says. Using APEX software, which is a credit recovery program, students at risk would be more apt to want to stay in school. “The goal is to have more kids graduating,” Grier says.

Next year Grier wants to start a pilot program, the Young Men’s Club, in which 10 young men at risk of not graduating will have a male teacher as a mentor for four years. The mentors will oversee the students to gauge if they need tutors for particular classes and then connect them with partners in the community. They can also watch sporting events together, such as San Diego Padres games, and visit colleges and universities.

Grier adds that the district is also lowering class size in 30 of the highest poverty elementary schools so that the student-teacher ratio is smaller—15 to one in grades K-2.

Potential Creative Savings

Facing tough economic times or not, Grier says he’s constantly looking for smart ways to save money in San Diego schools. For example, the district has a new state-of-the-art computerized routing system for school buses in the transportation department. “Maybe we will need fewer people to operate it,” he says. “We’re in the process of looking at that.”

In the meantime, the district saved $1.5 million by changing school bell schedules. Now schools start at different times and, therefore, a single bus with the same driver can pick up students at two schools in the morning as opposed to just one, saving fuel and time, Grier says.

Some employees in the district have a cell phone, a beeper and a Blackberry device. Grier believes they should only have one device, and he wants to get a plan that has “unlimited calling minutes” with no roaming fees.

Critical Point

To Weaver and likely many others, the funding of public education in America has reached a critical point. “The question is: Will our students be prepared, and what is our responsibility for causing that preparedness to occur?” he says. “And we will not be able to do that the way we are currently investing in public education. We may have come over here on different boats, but we are all in the same boat now.”

Angela Pascopella is senior features editor, Freelance writer Christopher Hann did additional reporting.