Experts: Schools will continue to face financial struggles, should use crisis to reinvent

NEW ORLEANS – Don Boyd has a message for school districts in Michigan and across the country trying to make due with less, even as the economy ever so slowly recovers: Get used to it.

Boyd, of the Nelson A. Rockefeller Institute of Government, said districts as well as state and local governments will find their financial struggles continue for years because of the way they are funded and their fixed expenses.

But experts attending a Friday session at the Education Writers Association national seminar in New Orleans said there could be a silver lining if schools use the budget problems as an opportunity to reinvent how they operate, bringing about long-discussed reforms.

Districts this year are looking at steep cuts after being propped up for two years with federal stimulus dollars and “edujobs” money intended to prevent layoffs.

Michigan Gov. Rick Snyder has proposed cuts that local educators say could be close to $800 per student.

Boyd’s group is part of the State University of New York – Albany and studies how local governments can improve. He said there are variety of reasons why schools and local governments find themselves deeper in the hole.

Businesses in a recession, he said, face reduced demands and can adjust their workforce and other expenses. But for governments, a recession prompts a greater need for services, even as revenues drop.

Educators who think they’ve faced the crisis already should expect the hardest hits to come, Boyd said.

“School aid tends to the last thing that gets hit less hard than other areas of a state budget, but eventually the lawmakers realize they have no choice – that’s where the money is,” he said, noting that education spending tends to be the largest slice of a state’s budget pie.

Boyd said districts then need to consider that they also rely heavily on property taxes, and there is generally a 3- to 5-year lag when property values drop, depending on a state’s assessment plans.

Boyd said the continuing expenses of pensions and retiree health care will continue to be a drag on any attempts to climb out of a budget hole.

Consider, he said, that more than 205,000 education jobs already have been cut since September, 2008, about 2.5 percent of the school workforce.

Michigan’s schools are funded with a combination of sales taxes and property taxes. Sales tax revenues were immediately down as the recession hit, with people either having less money to spend or postponing purchasing to be safe.

But now state schools are seeing the reduction in property taxes as housing values drop. Intermediate school districts and community colleges are more reliant on property taxes than K-12 districts.

Karen Hawley Miles, president of Education Resource Strategies said the reality is that schools are facing, well, a new reality. And they need to make substantial changes in the way they operate.

The Massachusetts-based non-profit organization works with urban school systems to transform their resources use to improve learning.

“This was a system that was broken even before the recession,” she said. “The question they face is will they be able to use this painful time to put us in a better position for the future?”

Miles said educators know what it takes to create a high-performing school. The challenge will be figuring out how to sustain that performance, then replicate it.

“We can’t do this one-by-one with charter schools,” she said. “We need to create systems.”

Miles said districts should start looking at ways to restructure compensation so the best teachers are paid the most, reconsider views on class sizes and look at ways special education is funded.

“We need to pay our best teachers more,” she said. “Now, with top salaries, you get them based on years of service and not how well you do.”

Schools in California are facing among the most dire financing challenges, and sheer size of the state makes its problems a national issue, said Louis Freedberg, senior reporter at California Watch, an investigative reporting website.

He said California already has spent its $7.3 billion in stimulus money, and most of the $1.2 billion “edujobs” cash that arrived last year. A temporary tax increase expires in June.

“This is an enormous cliff,” he said. “We’re looking at $1,000 less per-child compared to 2007-08. This crisis is extreme, and it affects 1 in 8 school children in the U.S.,” he said. “That means it affects the whole country.”