December 14, 2010

Nationally, a growing chorus of policymakers and education reformers are urging educators to "do more with less" and to see tight financial times for schools as an opportunity for innovation.

But as a new EdSource report points out, the resource challenges many California schools face are likely more severe than is true in the rest of the country. The State Budget Summit for Educators, held today in Los Angeles, further underscored the challenges schools have been facing and will face going forward.

That makes the call to rethink the status quo more difficult here but perhaps even more necessary if California schools are to continue their progress improving student achievement.

The EdSource report is entitled Challenging Times: California Schools Cope with Adversity and the Imperative to Do More. Drawing from a wide body of evidence, it documents the extent to which California's state budget troubles, including this year's record delay in passing the state budget, have strained districts' ability to manage their budgets responsibly and created financial uncertainty for them.

In contrast to the norm nationally, California's state government controls about 80% of the revenues that school districts receive, with over half coming from the state General Fund. That leaves K–12 education extremely vulnerable to recent volatility in state tax collections. Local property taxes, although down somewhat, are still a more stable revenue source, but they account for less than a quarter of total school revenues here.  They represent about double that proportion in Texas, Florida, and New York.

The EdSource report chronicles how the various strategies the state has employed in order to keep its financial ship from sinking—including education funding cuts and delayed allocations to school districts—have affected schools. About one in six of the state's more than 1,000 local education agencies have certified that they might not be able to meet their financial obligations within the next two years, including 14 that reported being close to insolvency this year.

School agencies have a limited number of options for making ends meet. They are constrained in both their ability to increase revenues and to reduce expenditures. In contrast to other states, California severely limits the revenue raising and taxing ability of school districts. At the same time, state allocations have kept per-pupil spending below the national average and relatively high labor costs here have resulted in staffing levels that are nearly the leanest in the nation. And with personnel representing over 80% of the average district's operating costs, reducing staffing costs is almost inevitable. To add to the pressure, some costs, such as medical benefits for employees and retiree benefits, continue to rise.

Another round of cuts in state funding, which is increasingly being predicted, could have devastating effects on classrooms and school sites throughout the state.

As the EdSource report points out, "For many districts, the need to make cuts—likely including layoffs—will continue. For districts that have already reduced their reserves and staffing levels drastically in recent years, few options remain... Already, districts have taken previously unthinkable actions to deal with fiscal difficulties. For example, some districts have cut the school year or furloughed their staffs."

Even before officially taking office, Governor-elect Jerry Brown has conducted two forums to describe how serious the state's financial situation is going forward and how difficult it will be to find solutions. At the December 14 event for educators held in Los Angeles, he did not promise to protect education but pointed to the need for greater public understanding of the complexity of the problems.

In January, Brown and the Legislature will begin their deliberations on ways to address the financial situation. It remains to be seen whether state leaders will continue to use education funding cuts and delays to mitigate the state's budget shortfall. If they do, they may risk pushing a critical mass of the state's schools to the point where financial survival swamps educational concerns.

Some key facts about school funding in California

• According to the Dec. 14 report at Brown's summit, the state has experienced a 20% decline in Proposition 98 funding per pupil between 2007–08 and 2010–11.
• The state controls more than 80% of the funding for K–12 schools.
• Three-fourths of the 57 local general obligation bond elections held in November 2010 passed by at least meeting the 55% approval threshold required.
• Out of 17 parcel tax elections held statewide in November 2010, just two met the two-thirds voter threshold needed for passage.
• Staffing ratios in California are 48.1 per 1,000 in California, 75% of the national average of 64.5 per 1,000.