Strained Schools Face Bleak Future

Districts Foresee Budget Cuts, Teacher Layoffs,

and a Slowing of Education Reform Efforts

Today, the Center on Education Policy released a report describing the fiscal condition of school districts for school year 2010-11 and the anticipated condition for school year 2011-12.

Drawing on information gathered through a survey of a nationally representative sample of over 450 school districts, this report examines the extent to which federal stimulus and Education Jobs funds made up for district funding shortfalls, and the types of cuts being made to balance district budgets.

The survey results indicate that in order to compensate for lost funding, districts are cutting staff – including teachers – and services and are slowing the progress on education reform.

The report, Strained Schools Face Bleak Future: Districts Foresee Budget Cuts, Teacher Layoffs, and a Slowing of Education Reform Efforts, is posted on the CEP Web site and can be downloaded free-of-charge.

Introduction:

Many school districts had to cope with shrinking budgets this past school year, but the effects of these cuts were cushioned to some extent by the availability of federal economic stimulus money. In 2009 and 2010, school districts received about $80 billion from the American Recovery and Reinvestment Act of 2009 (ARRA). These funds were intended to stave off teacher layoffs, stabilize declining state and local education budgets, and blunt other negative effects of the economic downturn for schools. In the summer of 2010, districts received an additional $10 billion through the Education Jobs legislation to save or create education jobs for school year 2010-11.

Now that the ARRA and Education Jobs funds are nearly depleted, what do school districts expect their budgets to look like for school year 2011-12? This report by the Center on Education Policy (CEP), an independent nonprofit organization, describes the fiscal condition of school districts for school year 2010-11 and the anticipated fiscal condition for school year 2011-12, the extent to which ARRA and Education Jobs funds are making up for funding shortfalls, and the types of cuts being made to balance district budgets. Our data were drawn from responses to a survey administered to a nationally representative sample of school districts in the winter and spring of 2011. This is the second CEP report on the financial status of school districts and their implementation of ARRA; the first was released in July 2010. Two other CEP reports have addressed state fiscal conditions and state ARRA implementation.

Seven key findings are evident from the district survey data:

• A grim situation is expected to worsen in the coming school year. A large majority of all school districts, about 70%, experienced funding cuts in school year 2010-11. An even greater proportion of districts, about 84%, anticipate funding cuts in school year 2011-12.
• Districts are compensating by cutting jobs. About 85%of the districts with funding decreases in school year 2010-11 cut jobs for teachers or other staff. Approximately 61% of the districts that anticipate funding shortfalls for school year 2011-12 have plans to cut staff, but this percentage could go higher because at the time of our survey, many districts had not yet decided where to cut.
• No type of district appears to be immune from budget reductions or staff cuts. Shrinking budgets and cuts in education jobs have affected and will continue to affect all types of districts—city, suburban, town, and rural. 
• Funding cuts are hampering progress on school reform. About 66% of the districts with budget shortfalls in 2010-11 responded to these cuts by either slowing progress on planned reforms or postponing or stopping reform initiatives. Slightly more than half (roughly 54%) of the districts that anticipate shortfalls in 2011-12 expect to slow progress on reforms or postpone or stop reform initiatives.
• Most districts have reached the dreaded “funding cliff” with no ARRA funds left to help ease funding shortfalls in school year 2011-12. ARRA and Education Jobs funds have helped to cushion some of the shortfalls in district budgets, but most districts have exhausted these funds. Less than one-third (about 30%) of the nation’s school districts expect to have any ARRA funds available for school year 2011-12.
• Most of the districts that received extra funds through ARRA for the federal Title I and Individuals with Disabilities Education Act (IDEA) programs used at least some of these funds to save or create teaching or other staff jobs. Roughly 69% of districts that received ARRA Title I funds and about 83% of districts that received ARRA IDEA funds used a portion of these funds to save or create jobs. A majority of the districts that received ARRA Title I or IDEA funds also used these monies for staff professional development and for supplies and equipment.
• Districts believe they are better off for having received ARRA and Education Jobs funding. About 89% of districts that received any ARRA or Education Jobs funds indicated they are better off for having received those funds than they otherwise would have been.