Schools feel pinch from economic woes

Officials look for the least painful trims, but many worry about their ability to close achievement gaps.

School districts across the United States are tightening their belts in anticipation of a meager fiscal diet that could carry into 2011.

As state and local revenue declines, officials are looking for the trims least likely to harm the quality of education. Although some districts have rainy-day funds to tap, concern is growing that students, particularly those who are struggling to learn or who are homeless, are going to feel the pinch.

Just over a third of superintendents in a recent national survey said they've already increased the size of classes because of the downturn, according to the American Association of School Administrators, an organization in Arlington, Va., that supports high standards for public education. Thirty percent of superintendents are considering layoffs. Of the two-thirds who said their districts are inadequately funded, 83 percent think it's detrimental to their ability to close achievement gaps for minority groups.

If the dry spell lasts through multiple school years, "that's when real noticeable things start to happen," says Michael Griffith, an analyst at the Education Commission of the States, a policy group in Denver. Delaying purchases leads to book shortages, while school technology and infrastructure fray. The ax often comes down on after-school and summer-school programs for struggling students. "The people who are hurt the most are those who need the most assistance," Mr. Griffith says.

With 41 states confronting revenue shortfalls this year or next, a number are likely to include education in their cuts, he says. In California and New York, which had deficit woes even before this fall's financial crisis, proposals to cut education funds midway through the school year are meeting resistance. New York Gov. David Paterson (D) called for pulling back $840 million of this year's school budget – up to 10 percent for some districts – but the proposal has been shelved until January. California Gov. Arnold Schwarzenegger (R) wants about $2.5 billion in cuts to schools and community colleges.

Once schools have signed contracts, if the state withholds promised aid, it would be like "dropping a bomb in the middle of the school year," says Timothy Kremer, executive director of the New York State School Boards Association. "It only happened once before [in New York], in the early '90s," he says. "Many districts had to ... really dig into the bone of their programs, and many of them have told me they never fully recovered."

Ideally, financial crises would be an opportunity for states and local districts to shed less productive initiatives, but it seems to rarely work that way, says Eric Hanushek, a senior fellow at Stanford University's Hoover Institution in California. Often, a simple band-aid measure is the response, he says, such as laying off new teachers. Overall, he says, the challenge is the instability in funding: When "one year you pour a lot of money out to the schools and the next year you squeeze back, it doesn't allow for a lot of rational planning."

Meanwhile, Georgia since 2003 has been sending less money to schools than the state formula calls for, says Herbert Garrett, executive director of the Georgia School Superintendents Association. This year the schools may face a 2 percent shortfall and next year another 3 percent, which would bring the total shortfall since 2003 to nearly $2 billion, Mr. Garrett says. It appears that state limits on class sizes and initiatives such as one that places a "graduation coach" in each high school are in jeopardy, he says. In his 40 years in education, this economic situation "ranks among the worst," he says.

When states decrease funding, local districts have often found ways to increase theirs – sometimes through higher taxes. "Per-student spending during the downturns of the early '80s and '90s continued to increase," Griffith says.

Now, however, it's not clear how possible that will be in any but the wealthiest districts. "In previous times, school districts have turned to the business community, the parent community for support ... [but now] the well is dry everywhere you look," says Dan Domenech, executive director of the American Association of School Administrators.

Schools are feeling the squeeze just as there's a surging need for the safety net they provide. Hundreds of districts are reporting that in the first few months of school, they've served nearly as many homeless students as in the entire previous year. Las Vegas saw an 82 percent increase in the first two weeks.

Districts are each required to have a liaison to help homeless children stay on track in school. "Some of the liaisons say they can't get through their stack of referrals," says Barbara Duffield, the Washington-based policy director for the National Association for the Education of Homeless Children and Youth.

Cincinnati Public Schools have seen a 28 percent increase – 266 more kids than last year, says Karen Fessler, manager of the district's Project Connect for homeless students. Her program is short-staffed, and a local nonprofit that supports schoolchildren's immediate needs is hitting hard times, too. "You hear about the bailout," Ms. Fessler says, "and you wonder, when is this actually going to trickle down to the individual families we're serving?"

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